Can a debt counselor help to solve your financial problems?

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Problem:

I have accumulated debts on credit cards, personal loans and medical bills. My total debt amount is $80000. I got laid off from my job few months back. So, I can’t afford to make the payments as of now. I am trying to get a job as soon as possible. The creditors are threatening to sue me. I am thinking of getting help of debt counselors. Now what I wish to know is that whether or not they can be trusted. Are they really helpful? Should I get help of a debt counselor or file bankruptcy? I live in Los Angeles. Please help.

Solution:

If you have incurred such a huge amount of debt and are unable to pay it back, then it is advisable to take help of a debt counselor. He will be able to help you in getting out of financial problems. Most financial advisors don’t recommend debtors to file bankruptcy and there is a valid reason for it. If you file Chapter 7 or Chapter 13 bankruptcy, it will remain on your credit report for around 10 years. Your credit score may go down by 200 to 250 points. Lenders usually don’t approve loan applications of the borrowers having poor credit score. Therefore, it will be extremely difficult for you to qualify for any kind of credit.

The debt counselors will analyze your financial situation and then suggest you the best course of action. They will offer effective management tips that can help you in getting out of the problem. However, if you are still not able to make payments to your creditors, they may advise you to get enrolled in a debt settlement or debt consolidation los angeles program. These debt relief programs will help you get rid of debt problems comfortably.

After going through your query it is quite clear that you don’t have sufficient income to make payments to your creditors. Now, it is a fact that without sufficient income to make debt payments, a debt or credit counselor may not be able to solve your financial problems. Debt counselors are not magicians. They can suggest you the ways and tips to get out of debt crisis but they will not provide you any money.

The debt consolidation/ settlement companies charge fees for their services. So, even if you get enrolled into these programs, you’ll have to keep aside some money for paying the required fees. You need to have some funds in your bank otherwise even the best counselors won’t be able to help you out. Try to find a well paid job so that you can get out of this mess sooner and live peacefully.

Finally, you can trust reputed debt counselors. They will try their best to help you out. You can get hold of a list of credit counseling agencies from the National Foundation for Credit Counseling, the Association of Independent Consumer Credit Counseling Agencies, or from U.S Trustee’s office. If you want to get more information on the agencies, you can always check with Better Business Bureau (BBB). You can get information regarding an agency’s reliability from BBB. However, it is better to not deal with agencies that are not BBB accredited business.
Article author: Jason Holmes - click here to see more articles by this author

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