Thomas F. Miles, Attorney and Counselor at Law
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Can credit counseling help with unmanageable debt?

Many California consumers who are saddled with high levels of debt are aware that they have options. For some, personal bankruptcy seems like the most efficient path toward a debt-free future, but most people want to attempt repayment before taking that final step. In seeking a means of repaying unmanageable debt, credit counseling is one viable option.

It is important to understand that, unlike bankruptcy, credit counseling is a lengthy process, and can take between three and five years to complete. At the onset, the consumer will meet with a trained credit counselor, who will conduct a thorough assessment of all existing debt. The next step often involves contacting one's creditors to negotiate for improved repayment terms. The counselor can assist in this process, and can often obtain lower interest rates, extended repayment timeframes and other benefits.

Next comes the hard part: adhering to the terms laid out within the repayment agreements. In order for credit counseling to be effective, consumers must have the financial ability to repay their debt in the agreed-upon manner. Failure to do so will land the consumer right back where he or she started, and still in need of debt relief.

For many California consumers, personal bankruptcy offers a faster and more certain approach toward unmanageable debt than credit counseling is able to provide. In many cases, the choice between the two comes down to how much income is available to put toward repayment efforts. For those who are still experiencing the financial strife that led to their debt issues, repayment may simply be impossible to attain.

Source: The Huffington Post, "How Credit Counseling Helps", Terry Savage, June 16, 2015

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