If you look at the concepts surrounding debt relief through credit counseling, you will find that it makes a lot of sense. You may also be surprised to know that although that is true, it has a very poor success rate.
Credit counseling involves getting advice from a debt professional. Ideally, they will look at your debts, your income and expenses to help you decide on the best course to eliminate your debts. They are knowledgeable of the legitimate ways you can pay off all that you owe and if you need a professional debt management expert or negotiator. They can also honestly tell you if you have no other choice but to opt for bankruptcy.
The benefit of getting a credit counselor is having an expert guide you in coming up with a payment and budget plan. In truth, this is what you really need to get over your debts. As long as you are dedicated, following through your debt payment plan should suffice.
However, statistics show that not even half of the people opting for a credit counseling option are able to conquer their financial woes. More often than not, they end up filing for bankruptcy. There are two things that point to the failure of credit counseling.
One of the two involves the wrong attitude towards this debt relief option. This can be their inability to make a complete commitment or continually incurring debts – there are many scenarios that will lead to failure. If the debtor is not willing to change their behavior and correct their spending and budgeting habits, they will not find the discipline to see through the payment plan that they have created. It is hard to pay off debts and it is very easy to fall back into it so you know that a wrong move can spiral out of control and render your past efforts futile.
The other reason why credit counseling can fail is because of an unrealistic representation of their financial standing and a wrong assumption on what this debt relief option can give them. Credit counseling is only meant for debtors with the means to pay off their debts. It does not lower your outstanding balance. The counselor is also unable to negotiate with your creditors for you. If you need to communicate with your creditors, you need to do that yourself. If you are evidently on the brink of bankruptcy, talking to a credit counselor cannot prevent that from happening. This is especially true if you have no way of increasing your income enormously. Debtors filing for bankruptcy are encouraged to get credit counseling but this is not a way to help you steer from it.
Based on what you understand of your credit standing, you need to consider just what your monetary capabilities can afford. If you cannot meet the minimum payment of your debts, you need to opt for debt settlement or debt management. If you cannot make any payments at all, bankruptcy is your option. At the very least, a credit counselor can help you decide which option can help you arrive at a debt free life.