The federal reserve reported that there is approximately $2.4 trillion  in consumer debt in the US as of June 2010. That is roughly the GDP of the UK so to say that that number is huge is a complete understatement. You may have a piece of the debt, hopefully a small one, but if you do find yourself under a mounting volume of credit card debt you may have looked into credit counseling as an alternative to help you manage your debt effectively.

There are several options when it comes to debt solutions but the alternative that fits most peoples tolerance for risk and financial situation is credit counseling. An effective credit counselor can successfully negotiate lower interest rates across all your unsecured debt, which in turn lower your overall debt, lower your payments, and lower the amount of time that it will take to pay off that debt. 

The goal of a credit counselor is first and foremost educate you on how to manage your debt effectively, and how to never make the same mistakes that you made in the first place. The other goal is to get you into a debt management plan.

What is a debt management plan?

Plainly speaking a debt management plan is a method used by credit counselors to pay back unsecured debt. A good debt counselor using a debt management plan will lower interest rates that way a debtor can pay back the debt in a manner that they can realistically afford.

A debt management plan has several advantages one of them being is that with a DMP it acts a tool to negotiate with your creditors via your credit counselor. It also allows you to free yourself from those annoying, borderline harassing phone calls from your creditors due to the fact that when you’re in a debt management plan they are aware that you are in the negotiation process. Creditors will cease the phone calls while you are in that process, which in turn betters your quality of life.

 Reputable credit counselors will not only put you in a debt management program that will sustain a certain level of livelihood but they will also provide you with the resources that will put you on the right track to be debt free for life.

Once you’ve made the decision to move forward with a debt management plan the credit counselor will start doing some work for you. They will evaluate your current credit card debt, income level and expenses and start working from there on out. A good credit counselor will negotiate lower interest rates on your credit cards, which in turns lowers your monthly payment. They also can negotiate to waive your late fees and over-limit fees. As we mentioned earlier, it’s also going to stop those annoying phone calls from creditors, and to some people that’s enough reason to give a credit counselor a phone call.

While in the debt management plan you can expect to make a monthly deposit from your bank account and those deposits are what’s used to pay your creditors according to the schedule that your debt counselor has put you on.

Overall there are really only a few solid debt solutions out there, and credit counseling is probably the best bet if you don’t want to get sued for not paying your creditors like what might happen if you’re in a debt settlement program. It’s still a big decision, and no decision should be made on a whim, make sure you do your due diligence and research the credit counseling agency before you do anything!