subject: Credit Counseling: Getting Help On You Debt Related Matters [print this page] Whenever we come across the word counseling we think of a patient person listening to our problems. He is a person who guides us to recover from some sort of a problem. The problem can be of any type like aggressive behavior, drug addiction, etc. A counselor can come in handy for educating people too.
Credit counseling can fall into the aforementioned category of counseling. It is the process of enlightening people from falling into the debt trap. There are several ways by which one can easily avoid falling victim to debt. These steps include debt management and budgeting.
Budgeting is a very important key by which you can both increase your wealth as well as regulate your expenditure. The expenditure will be regulated in a manner such that your purchases will not lead to indebtedness. Budgeting depends partially on the risk taking ability of the person. It also depends on whether the person is married with children or single.
Some people budget for a long time and some for a short period, say for instance 5 years. It also depends on how a person plans his investments. This will depend on the risk taking appetite of investor in the stock market. However, a person should exercise caution while investing in any type of mutual funds and stocks.
In the USA, the first credit-counseling centre opened its door for public in the year 1951. The first centre opened its door after the foundation of the National Foundation for Credit Counseling. These credit counseling centers deal with the creditors and draft a Debt Management Plan.
Bankruptcy Abuse Prevention and Consumer Protection Act (2005) has made consumer debtors to compulsorily participate in credit counseling. This is the requirement prior to 180 days before filing bankruptcy. The debtor has to complete a program with an approved credit counseling authority.
There are several criticisms associated with credit counseling:
Belief that participating in a debt management plan will result in lower credit score;
Critics have pointed that fair share funding model has helped only creditors and not the debtors
Repayments of loans underwritten by federal programs have more clauses associated with it apart from the clauses attached by the lender. This makes it more complex for debtors.
Credit counseling centers have developed all over the USA. In Arizona too there are numerous such centers. A debtor should approach an Arizona Credit counseling centre. However, you should also take assistance of a lawyer before filing bankruptcy. A lawyer will give you more ideas on how to deal with indebtedness.
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