Answer:
Consumer credit counseling is a process which should educate consumers about how to avoid incurring debts they cannot afford and helps establish a method of debt relief, usually by negotiating with creditors to establish a debt management plan for a consumer which helps him repay his or her debt at reduced payments fees and interest rates. Credit counselors receive their fee from the creditors for their services. Consumers should educate themselves to all possible options and counselors should help them do that. You should choose a counseling service that offers a full range of services and one that has wide range of informational material you can search through on your own. Your initial consultation should be free and you should not feel pressured as if you were talking to a salesman.
If you think you need bankruptcy advice, get it immediately. Free guides to Chapter 7 and Chapter 11 bankruptcy are widely available online. The average person filing for bankruptcy is $25,000 to $30,000 in debt. Get advice if your debt is less than this, there may be other ways to manage your debt. Bankruptcy stays on your credit for 10 years and should be considered when there are no other options that make sense for you. The Bankruptcy Abuse Prevention and consumer Protection Act of 2005 made it a requirement for consumer debtors filing for Bankruptcy in the United States to complete a program with an approved non-profit budget and credit counseling agency during the 180-day period preceding the filing of bankruptcy. A good counselor should help you take a look at your assets. What do you have that you can live without? You might consider borrowing money from a pension fund if you have one. Usually you can borrow up to 50% at very low interest rates. Do you have valuables you can do without? Pulling together as much money as you can, may allow you to make lump sum payments on your credit cards. Sell the second car, big screen TV, and old clothing. Consider getting a temporary second job.
If you are falling behind on your mortgage, do not wait for help and advice. One of the best places to educate yourself and find help is at the U.S. Department of Housing and Urban Development (HUD) website. You can find a HUD approved counseling agency and should do so immediately when you are one payment behind. If you are having problems paying off your student loan there is help available. A federal program can limit monthly payments of federal student loans to 15% or your income. There are many resources for both federal and non-federal student loan help available. You can also ask your lender for a hardship forebearance (this can be up to 3 years), or a deferment for unemployed if you have lost a job. This will also suspend your payments for time periods of up to 3 years, thus allowing you to use the would-be student loan payment funds to pay off high interest credit cars or loans.