Are you in debt problems? Are you getting loan denials because of an unsatisfactory credit score? Do you think there’s no option left for you to get rid of your debts other than filing a bankruptcy? If you’ve answered ‘yes’ to any of these questions, then you should attend a credit counseling session to overcome your financial problems.

Here are 3 scenarios when you need to go for credit counseling.

1. To manage your debts

You may take help of credit counseling when you are unable to manage your debts on your own. In such a counseling session, a credit counselor at first evaluates your financial situation to get an idea regarding your monthly income and how much you owe to your creditors. After analyzing your financial status, the counselor offers suitable suggestions to manage your debt/credit properly. If required, the counselor also offers you a personalised debt relief pan following which you can get out of debt completely. A counseling agency may also offer a debt management plan when simple budgeting tips and a repayment plan are not enough to pay back your dues.

2. Before filing a bankruptcy

Before filing a bankruptcy, it is required by law that a debtor must obtain credit counseling by an agency approved by the United States Trustee. The counseling session should last for about 60-90 minutes and may take place in person, online or over the phone. In such sessions, a counselor evaluates your financial situation, offers a budget plan and discusses about alternatives to bankruptcy. Such a counseling session helps in deciding whether or not a debtor can overcome his/her debt problems by following the budget plan. Along with the budget plan, the debtor also receives a credit counseling certificate after attending such a counseling session.

For filing a bankruptcy, a debtor need to submit a bankruptcy petition along with the budget plan, the certificate and the description of the services provided by a counseling agency. As per law, you should attend a pre-bankruptcy counseling session within 6 months prior to filing a bankruptcy.

3. When you need credit repair

You may need to go for credit repair when you’re not satisfied with your present credit score and need to improve it. If you opt for professional help to repair your credit record, you need to attend a counseling session with a credit repair organization. Such a counseling session may help you fix certain negative items, such as, charge-offs, late payments, etc. The counselors negotiate with collection agencies, creditors and credit bureaus to either remove negative listings from your report or update account status such that they are less harmful for your score. However, while taking credit repair help, remember that there are certain items (such as, a bankruptcy) that cannot be removed from your credit report before the completion of a certain period.

It is advisable that you get credit counseling help from a reputed organization when you need guidance to pay off debts, to repair your credit or you’re thinking of filing a bankruptcy. While looking for a credit counseling provider in order to satisfy the bankruptcy filing requirements, make sure you deal with an approved organization in your judicial district.