If the loans far exceed your financial capabilities to clear on time, you may consider credit counseling.

The simplest method is to start a search either online or in a phone book. Always beware of possible scams such as promise to repair bad credit in no time or create a entire new identity to rebuild credit. You should stay away from them if you feel too good to be true.

Trustworthy credit counseling companies will only accept you as their client if only you’ve passed some prerequisites. Although not all agencies adopt the same standard but generally you need to have a source of income and some unsecured debts. Why unsecured debts? Because credit counseling may not help you much if you’ve problem with secured debts like mortgage or a car loan.

Remember to bring along all relevant documents and statements from your current loans the very first appointment with the credit counselor. They will need to know the details of your situation, such as the amount you owe and the monthly payments you are supposed to make.

From then on, it’s the counselor’s job to contact your lender and negotiate a new payment term and lower interest rates. You have the choice to manage the payments yourself of make lump sum payments to the counseling company and let them handle all the monthly payments for you. However, before you entrust them with that lump sum of money, make sure they have no history of missed payments. This is to reduce, if not prevent any damage to your credit history caused by the agency.

The follow up is that a new budget will be devised for you to improve your financial situation. If you follow that budget, you have higher chances of avoiding financial trouble in the future. Some counselors may even recommend some software programs to help you manage your finance efficiently. The counselor is willing to provide advice to you anytime whenever you need it.

If you’re willing to clear your debts in five years with lower interest rates other than filing for bankruptcy, let the professional credit counselor help you.