Forms of Debt Counseling
There are almost as many different kinds of counseling as there are different kinds of debt. And even within the different kinds of debt counseling, each debtor has unique circumstances that require different solutions and advice. That’s another advantage counseling offers over a centralized source of guidance; even the most knowledgeable debt relief guru can’t help every debtor individually like a debt counseling agency can.
The most common form of debt counseling is probably credit counseling-credit card debt is extremely common and easy to acquire. It’s also designed to take decades to pay off these debts, so many consumers find themselves in need of debt counseling services.
HUD-approved housing counseling helps with more than mortgage debt. Counselors provide advice to renters, people looking to buy their first home, and senior citizens who could benefit from reverse mortgages. Housing counseling helps homeowners avoid foreclosure by seeking loan modifications, short sales, and taking advantage of government programs.
By law, anyone seeking to declare bankruptcy must seek bankruptcy counseling before they file. They then must complete an education course before their debt is discharged. Any counseling organization that wishes to provide these services must be approved by the EOUST (Executive Office for US Trustees) to provide pre-bankruptcy counseling & education. This EOUST approval doesn’t endorse or assure the quality of an agency’s services.
PLEASE NOTE: While credit.org is approved by the EOUST to provide bankruptcy counseling & education, we do not offer any legal advice or services. We urge anyone seriously considering bankruptcy to seek the services of a qualified attorney in addition to the required pre-bankruptcy counseling.
Student Loan Counseling
Since student loans are not dischargeable in bankruptcy and usually carry favorable terms, the best thing counselors can usually do for student loan debtors is help them address their other debts and financial obligations, freeing up income to apply to student debt payments. There are some student loan relief options like deferments, forbearance, and the government’s Income Based Repayment Plan that can help student loan borrowers. A knowledgeable counselor can direct these borrowers to the appropriate remedy.
Mental Health Counseling
Some people with severe compulsive spending issues may need to seek professional psychological counseling in addition to debt counseling to help them pay off their debts. For these individuals, it is important to address the root causes of their spending problem, or the relief provided by debt counseling may not be permanent. Some people feel hopelessness and despair when they face large debts and should seek professional mental health services if they feel they may be danger to themselves. (See “Don’t Let Credit Debt Turn To Tragedy.”)
DA Debtors Anonymous
This is a 12-step program for compulsive debtors. It applies the principles and methods of programs like Alcoholics Anonymous to people who cannot stop acquiring unsecured debts. Designed for those with very serious spending issues, Debtors Anonymous offers ongoing group support with local meetings in over 500 different locations.