Debt Counseling

If you are having problems keeping up with and paying your bills, you may be in the need of debt counseling. There are many debt counseling companies that give advice, usually for a fee but some offer free counseling, to individuals and companies who struggle with their short term and long term financial obligations.

Normally, it would be in your best interest to seek the services of a debt counselor or financial planner well before you get yourself too deep in debt. If you see yourself headed in that direction, go for the help.

But before you seek the help of debt counselors, you should know that some of them have ties to many of the same creditors that you may be indebted to and there may be a conflict of interest.

As a debtor, you should ask the debt counselors up front if they have any ties or obligations to any of your creditors and the debt counselors should be more than happy to disclose who they represent, or have ties to,in writing. If not, you should seek your help elsewhere.

Debt counselors are there to give you sound financial advice and they tell you what you don't want to hear about your spending habits. Most people already know what there financial problems are, they just need to hear it from someone else.

Everyone is different when it comes to debt counseling. Some people can take advice and move quickly to overcome their financial burdens while others are not so fortunate. How quickly an individual recovers from his financial troubles is up to that individual.

Debt counselors look at your income along with your bills and then provide you with a detailed analysis of the problem areas that need to be addressed. They formulate a solid plan for you to follow and keep tabs on how you are doing.

A debt counselor can only help you if you are willing to help yourself.

If you are too heavily in debt, you may have to resort to filing bankruptcy, but that should be a last resort. Bankruptcy is a means of either restructuring debt, or liquidating debt altogether, by way of court proceedings.

• Note: As a prerequisite for filing bankruptcy, Congress has enacted a sweeping reform bill that may require a petitioner to go to debt counseling before entering bankruptcy.

Remember, if you are advised to borrow money on your home to pay off credit cards, car loans, and other debt, it may drop your payments at the time but it will cost you much more in the long run.

Finance Topic of the Month: Federal Deposit Insurance Corporation (FDIC)