Credit counseling has two main objectives--helping you learn to better manage your cash flow through budgeting and to help you escape indebtedness. Credit counselors are trained to help you identify budget shortfalls. In addition, they can help you develop a plan to eliminate credit card debt.

Credit counseling is provided for individuals and families that can’t get ahead because of high interest debt. When your expenses and debt payments begin to exceed your monthly income, then you are on your way to financial destruction. Warning signs include late or missed payments and using credit cards to pay living expenses such as gasoline and groceries. If this sounds familiar, you are likely spending more than you currently earn.

People of all lifestyles have sought credit counseling to escape the burden of high debt. Depending on the particular person, high interests rates can affect people of all walks of life such as high income but are on the verge of bankruptcy or low income and simply drowning day by day using their credit cards to pay for things such as medication, food, and gas.

Choosing the right credit counseling agency can be a tricky endeavor. We recommend the following approach:

• Find out what fees are charged. Legitimate agencies will fully disclose fees charged. Some agencies charge a counseling or consultation fee, while many do not. Also, are their, classes and workshops free?
• See what fees are charged for participation in a debt management plan (DMP). Nearly all agencies must charge fees for a DMP to offset the costs associated with administering the plan. DMP fees should never exceed $60 per month.
• See if the agency offers face-to-face counseling and other on-site educational opportunities. If you cannot visit their office in person, make sure that telephone support will meet your needs.

Once you select an agency, feel free to call and speak with a counselor before committing to a session. Counselors are prepared to answer common questions and they can comment on any unique circumstances that you find yourself in.

One thing you will notice is the quality of counseling provided. Our agency does not simply provide debt management plans. On the contrary, our goal is to first find ways for you to get back on track on your own and then, if needed, provide suggestions for an appropriate debt repayment plan.

It is not enough to simply look at just one aspect of your financial situation. Our experienced counselors examine all aspects of your finances. We pay attention to your income, fixed and variable expenses, net worth and credit health. That way, they can identify potential options that can help you improve your current situation.

What may be most important is that the most experienced counselors will not judge you or lecture you on proper spending habits. You can go into a counseling session knowing that they are there to listen. They want to know what is important to you, what you feel you are capable of and what you are willing to let them help with.

The result is that you can get friendly, knowledgeable and unbiased help without committing to any one option. Your counselor can discuss the pros and cons of self-guided strategies, debt management plans, sale of property and even bankruptcy. If you are having trouble with secured debts such as auto loans and home mortgages, then they can normally help you understand options related to those types of debts as well.

If you are disciplined enough to develop and stick with a budget and payment plan, you may be able to correct your financial situation on your own. If you are already falling behind on payments though, you may need additional assistance.

Managing debt can be a challenge, especially when you begin falling behind. Many people find it difficult to stop using credit cards. The first step though is to see if you can get by without using credit. If not, you may need to seek help immediately.

A structured debt management plan (DMP) can be designed by a credit counseling agency to help you regain control. Credit Counselors have established relationships with many creditors who can offer benefits to help you. A credit counselor serves as a liaison, representing you and the creditor, so that a compromise on payment amounts, interest rates and fees can be reached.

Timely epayment through a debt management plan can improve your damaged credit over time and it can help you avoid the negative effects that debt settlement, judgments and bankruptcy have on your credit score. A DMP can help you eliminate credit card debt in less than 5 years. Benefits of a DMP can include:

• Reduced, consolidated monthly payment
• Late and over-the-limit fees stopped
• Reduced interest in most cases
• Re-aging of past due accounts to reflect current status in most cases
• Faster repayment of total unsecured debt

DMPs do not include secured debt, such as mortgages, auto loans or title loans. Collection accounts and medical bills can normally be added, but the benefits are rarely as generous as those normally provided by most creditors.

Lower credit card interest rates can be achieved through a number of methods, depending on your own financial strengths and weaknesses. Your options will depend on your credit and your financial health.

• Increased Payments

  
  
  Routinely sending in far more than the required minimum payment will drastically reduce the repayment time frame and save you thousands in interest cost.
  
  

• Balance Transfers

  
  
  If you have available credit on a low interest credit card account, then you may consider transferring high-interest balances to that card. Balance transfers can be a good approach to reduce credit card debt, but only if you are able to get good terms on the transfer.
  
  A permanent rate is preferred to a promotional rate. Also, consider that balance transfer fees may substantially reduce any savings while adding hundreds to your next monthly payment.
  
  Frequent balance transfers can hurt your credit score. You should carefully select the best offer and refrain from subsequent offers that are not substantially better.
  
  

• Credit Counseling

  
  
  When you are unable to increase your monthly payments, then you may need to consider that your budget is stretched too thin. Lack of a budget surplus also can place your finances under tremendous pressure if anything goes wrong.
  
  An Accredited Credit Counselor can help you evaluate your credit situation and provide feedback on your available options. An Accredited Financial Counselor can also discuss your net worth and any related aspects of your financial situation.
  
  Frequently, a counselor may be able to help you develop a self-guided plan. The counselor may discuss debt management options as a way to get back on track financially.
  
  Debt management can include a structured repayment plan, also known as a debt management plan. This plan is tailored to fit your own unique financial situation. Counselors will attempt to design a plan that fits your needs.
  
  Debt management plans allow you to receive benefits directly from participating creditors. Since credit card issuers created credit counseling decades ago, most offer substantial benefits to help you repay your debt, thereby avoiding future default risks.
  
  Benefits can include lower interest rates, with the amount of interest rate reduction depending on the creditor, the type of account you have and on their analysis of your situation.
  
  Lower interest rates can save hundreds or thousands in finance charges. They also have an extra benefit. They can help lower your monthly payment while still allowing repayment of the debt faster.
  
  If you would like more information on debt management techniques, budgeting or other information, contact The Credit Counseling Foundation today. We can show you how to regain control of your debt.