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Credit counseling not always the best path to debt relief

When debt levels reach a certain level, many South Carolina residents begin researching options for relief. One choice that many consider involves use of a nonprofit credit counseling agency. These companies offer to assist consumers in obtaining interest rate reductions, negotiating for the elimination of fines and fees and determining a repayment schedule that will bring the consumer debt relief over a period of time, usually ranging from three to five years.

Credit counseling is effective in some cases, and can be a good choice for consumers who have experienced a specific financial setback such as a medical emergency or unexpected family expense. However, in many cases credit counseling is not sufficient to eliminate all of a consumer's debt. It is possible to pay into one of these programs for many months or even years, only to find out that bankruptcy is still the only true path to the elimination of existing levels of debt.

It is also important for consumers to realize that credit counseling services are not free, even when working with a nonprofit entity. Fees range from $35-50 per month, and are paid on top of the determined monthly debt service payment. Data from the credit counseling industry suggest that as many as half of those who sign up for credit counseling are not successful in paying off their debt in this manner.

When making any decision concerning debt relief, it is imperative to understand the pros and cons of each option. For South Carolina consumers who have amassed a large volume of debt but who have steady income and are otherwise financially secure, credit counseling can be an effective tool for debt relief. For those who are struggling to make ends meet each month, or who have the risk of losing their employment, filing for personal bankruptcy may offer a better path to the elimination of debt.

Source: foxbusiness.com, "Behind the Credit Counseling Curtain," Fred O. Williams, Feb. 11, 2013

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Columbia, SC 29210

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Florence, SC 29501

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