If you’re swimming in an overwhelming pool of debt, you’re certainly not alone. According to a LendingTree, which analyzed data from the Federal Reserve, Americans owe more than a quarter of their annual income to debt. What’s more, consumer debt—debt from credit cards, student loans, personal and auto loans—is set to soar to a staggering $4 trillion in debt by the end of 2018.
Are you feeling stressed and anxious from debt? If so, you may want to consider debt counseling services. “Debt counseling usually involves a legal intervention between a consumer and their creditors,” explains Aoife Gaffney, a certified money coach and qualified financial adviser of Prudence Moneypenny Coaching. “It stops the stress and removes the shame.”
Reasons to Work with a Debt Counseling Agency
According to Gaffney, working with a debt counseling agency can do the following:
- Review your credit report;
- Helps put sustainable, realistic payment plans in place;
- Helps consolidate your debt into one payment;
- Reduce monthly payments;
- Can possibly renegotiate interest rates;
- Opens up the lines of communication between creditors and consumers; and
- Serve as an impartial intermediary between a consumer and their creditors to potentially help stop the phone calls, letters, emails and possible court proceedings.
Are you looking for nonprofit credit counseling and debt counseling options? Here are a few key things to look for:
Tips on Choosing a Debt Counseling Service
While shopping around for a debt counseling service, look for government funded and/or backed services. “There are private companies out there, and I am sure their intentions are good,” says Gaffney. “However, if you’re already struggling, there is no point in adding extra financial burden to yourself.”
Other questions to ask yourself when looking for a debt counseling service:
- Is there a physical office?
- What other services and resources does it offer?
- What is its mission statement?
- Is it a funded service? If so, by whom?
- Can you meet someone in person?
- Is the agency reputable? Search for reviews ahead of time.
- What are the fees involved? Are they one-time, or ongoing?
Jackie Lam is an L.A.-based personal finance writer who is passionate about helping creatives with their finances. Her work has appeared in Forbes, Mental Floss, Business Insider, and GOOD. She blogs at heyfreelancer.com.