It is a little known fact that the burgeoning debt relief industry is very unsuccessful in helping people repay their debts. It can actually be a better financial decision to avoid credit counseling if you are not sure that it will help you.
When you start the credit counseling process, you will sit down with a counselor that has training in budgeting, debt management and credit law. They will then look at your income and expenses with a view to reducing your expenses and using more of your income to pay down your debts. You can avoid credit counseling and the expense that it involves by simply doing these same tasks yourself.
There are many online resources that will help you to make a complete budget very easily. This will quickly show you your true financial position. In most cases, people can reduce their outgoings by sacrificing spending on things that are not essential. The truth is that avoiding credit counseling or not most people cannot stick to a restrictive budget of this kind. This is the reason that they initially got into credit trouble and the reason that most people that do go to credit counseling end up falling into bankruptcy.
People that are contemplating bankruptcy may not be able to avoid credit counseling, as it has become a requirement as part of the process. It is used as a tool to try to avoid bankruptcy, which can have far reaching long term ramifications for people that go through the process.
It is unfortunate that much of the advertising and information on credit counseling is more sales orientated and gives people unrealistic expectations. They focus on cases where people have had a good income but had made some poor choices that has led to them struggling with high monthly payments. The combination of a better budgeting and restructuring debt can then be used to produce a payment plan that can work to remove the highest interest debts quickly. The same outcome could have come about and they could have avoided credit counseling fees by taking these same steps themselves.
People that have severe financial problems are then caught by the same advertising and believe that they can be helped in the same way. The process is followed in the same way but the budget needed to even approach a payment plan is so severe that it needs a commitment that most people will not be able keep. The process of negotiating with creditors may reveal how critical your financial position is and lead them to begin trying to repossess items and to force repayment of loans. It may have been better to avoid credit counseling and instead to have looked at bankruptcy as this would allow them to keep possession of many of their assets.
The industry that surrounds credit counseling has grown because of the tough economic times. There are alternatives that are free or are provided as part of a state program with only a small payment. It is a good idea to look at these services first and to avoid credit counseling services as a first step in trying to improve your financial position.