Family Credit Counseling Can Save Your Marriage

Family credit counseling is a broad term that incorporates several possible services, and may sound a bit confusing. If you're reading about family credit counseling, you probably fall under one of the following categories:

  • Your bills currently exceed your income, and you're getting farther into debt each month.
  • You'd like to consolidate your debt, and pay it off quickly.
  • You need financial planning advice to avoid getting back into debt in the future.
Family credit counseling services typically include these three items, because it all comes together in the end. Credit card debt is common, especially in situations where you've had to take a sudden cut in income, and you took out a few cash advances to bridge the gap for a while. But even if you're back to work, and possibly earning more than you were before, with credit card interest being what it is, it is almost impossible to keep up with the interest each month. Let alone chip away at the capital. It becomes easy to fall into serious credit card debt in seemingly no time. Then, you need to earn significantly more to make up the added payment every month which keeps increasing even after you've stopped using the cards. This can lead to marital counseling because of fights you and your partner have over money.

You may have heard of consolidation, or even debt settlement. They are two different things. They may both be choices to you but be sure you understand the difference before you decide what is right for you and your family. With consolidation, counseling takes the form of paying off your debt, and collecting a monthly payment from you until you have repaid the entire amount. This way your credit cards get paid in full, and your rating remains intact. You can keep your credit cards for emergency use only. With debt settlement, your family credit counselors will negotiate a deal with your creditors in which they will accept a fixed reduced amount, based on what is to you. But often, you have to come up with the entire amount up front. So if you owe $50,000 in credit card debt, and your creditors agree to a $25,000 settlement, they usually want that $25,000 right away. So you still need to come up with financing, you will still have a monthly payment, and worse, you credit rating will take a nasty hit. It's one step shy of declaring personal bankruptcy.

Consolidation is only an option if you can afford to pay a fixed amount each month. Once you've secured a deal to consolidate your debt, you need to be able to stick to a monthly payment plan that won't leave you back in the line at the cash advance counter. That is where financial planning comes in. A good family credit counseling service will not offer you a consolidation plan without first studying your financial condition closely. They need to see how you will be able to make those consolidation payments each month, and still have enough cash for all your other expenses. Beware of companies who "guarantee" you a consolidation plan. Effective financial planning will be a key part to your ability to get out of debt, and stay out, for good.

If you're in a difficult financial situation right now, chances are it's quickly getting worse. Getting a higher paying job, or increasing your income is only one step, but it won't slow the credit card interest rates, and consolidation alone will not assure your financial stability. Get the complete package. The way to get out of debt and to stay out is to follow all the steps offered through family credit counseling.

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