Whenever a person falls into debt it does not mean that he has led an unplanned life. Things happen in our lives which can suddenly destroy all the plans we had and land us in a situation which was kind of unimaginable to us. Death, loss of a job, medical emergencies can all result in massive amounts of money either flowing out he house or significant monetary contributions getting frozen. Any of these situations can land up you into a bad credit situation. Of course you can also be in considerable debt just because you took a few wrong financial decisions early in your life. But that need not mean that you suffer because of those losses for all your life. You must get up, get rid of your misfortunes and misadventures and start afresh.
This is where the merits of credit counseling lie. Credit counseling provides the individual with the confidence to fight back, the tools to repay his debts, and the know-how to stay clear of future debts.
Ideally, the credit counselor should first analyze and understand your credit situation, draw up a workable solution for you to get rid of your debts and then motivate you towards reaching your objective. This is the primary responsibility of a good credit counselor. It is one thing to negotiate the interest rates, but to actually help you focus on the goals ahead and keep you on track is what separates an ordinary credit counselor from a good one.
So what do credit counselors do? Well they negotiate for you with the creditor. When you are deep in debt and you have failed to make payments to your creditors for a few successive months, your creditor also becomes apprehensive. They can of course drag you to court for default in payment. But if you are really not in a position to pay back the loan with the interest, then there is hardly any gain for your creditor. You will have to declare that you are bankrupt but the creditor wouldn't gain anything out of that.
The credit counselors try to find a middle path. They negotiate with your creditors so that the creditors relax the interest rates slightly so that it becomes easier for you to pay back. The creditors opt for this because they get their capital back with some interest and they don't have to go to the court and drag the matter on.
