You should opt for consumer credit counseling the moment you realize that you are unable to pay your bills on time, or are unable to pay the monthly minimums on your credit cards. There is no point in reaching a stage where debt collectors start landing at your doorstep every morning to extract their dues.
Credit counseling may give you some ideas as to how to manage the debt. It may also bring in some financial discipline in your life. However, not all credit counselors are above board. It is important to choose the right counseling service.
Among other things, you should be careful of organizations that charge you more than the usual $10 up-front fee. You should certainly steer clear of services that offer to settle your debts at little or no money, because such services are most definitely illegitimate.
A good idea is to confirm whether the firm is registered with either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agency;
You should also ensure that the payments made to the credit counseling firm are transferred to your creditors on time. Late or missing payments reflect badly on your credit rating, and if this becomes a regular practice you are better off without the services of such an unethical institution
Credit counseling has always been viewed as a double-edged sword. On the one hand, it helps you manage your debts better, but on the other hand it sabotages your reputation with creditors. However, it is safe to say that the positive aspect of the service far outweighs the negative repercussions. While a few creditors may be wary of lending you money again, most of them will still be willing after you have cleared your previous debts with the help of credit counseling.
It is important for you to do your research properly and opt for a service that does not further deteriorate your credit rating. For instance a company that tags you as a credit delinquent should be avoided, while one that merely informs your creditors about your decision to take up credit counseling is a better option.
In most cases, credit counseling works, and works well. Unfortunately if you are too far into debt and nearing bankruptcy, then this service will be of no use to you. It is equally important to curb your spending urges; otherwise, whatever advantages that accrue from credit counseling will be lost.