Debt Services: Do Debt Counseling Services Work?

Over the past two years, many people have seen their livelihoods disappear

. Good, honest, bill-paying people are hovering on the verge of bankruptcy and homelessness. These are dire times indeed. Congress keeps extending unemployment benefits, but benefits are often much less than what was earned while employed.

Added to all of this is the fact that there are currently on average 20 unemployed people vying for every job opening. The key to surviving in this economy is to get rid of all of your excess burdens and hold on until things turn around.

The best thing that you can do for your family right now is to dramatically reduce your debt burden. But how? You can move to a cheaper neighborhood; you can stop paying all of your bills and file bankruptcy. Or you could contact one of those debt services agencies.

Debt counseling agencies have received a lot of media attention lately. Many say that debt counseling is not needed in most cases and that individuals can do everything that they need to do to reduce debt on their own. Going solo helps reduce fees, but is it advisable? In today's economy, some are changing the way they think about debt services and counseling agencies.

After all, we have seen what can happen when lenders do not follow sound, financial advice. Who is to say that individual taxpayers shouldn't turn to financial professionals when it involves their own money?

The truth is that credit counseling services can be instrumental in helping people dig out from under a mountain of debt. Following are some of the ways that counseling services can help:

* They can contact your creditors and lower your payments and interest fees. You can do this on your own, but you can often get a better deal if you negotiate through an agency. The use of an agency also tells creditors that you are working on your whole financial picture and that they will be more likely to get paid as a result.

* An agency will help you consolidate your debt into one payment. You will pay them one payment, and they will disperse your money to your creditors. They will also take a fee off of the top. Fees can vary considerably so pay attention to the details.

* They will help you formulate a realistic budget and teach you how to manage money so that you will never be overwhelmed by debt again.

There are two main types of debt counseling services: for profit and not for profit. Usually, not-for-profit debt services are more affordable, but they might not be able to give you the amount of attention that you need. For profit services are more expensive, but they work hard for their money. The type of service that you choose will depend primarily on what you can afford and how much debt you need to reduce.

Debt counseling services do work for many. For others, they may only stall the inevitable. If you are at risk for losing everything, you owe it to yourself to learn about all of the options that you have.

by: Dan Cavalli

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