Credit counseling helps improve debt management skills

05.15.09
By Timothy Jones

Consumers who have been feeling underwater recently are likely struggling to manage their outstanding debt ranging from credit card bills to home loan payments.

In fact, some consumers behind in payments to credit card companies have found themselves subjected to increased interest rates or a cut in their line of credit which often adds to their mounting financial problems.

A new study shows that individuals and households so severely burdened by financial woes that they are considering filing for bankruptcy may first want to consider seeking help from a credit counselor.

According to the National Bankruptcy Research Center together with the Management International Financial Education Foundation, research shows that consumers who used pre-bankruptcy counseling demonstrated improvement in their credit report in as little as two years.

In fact, the second phase of the groups' study on the value of credit and bankruptcy counseling reveals that recipients of counseling had fewer delinquent accounts and kept accounts current longer than those who did not receive pre-filing or credit counseling.

With job losses continuing to mount, more personal bankruptcies are likely to emerge.

The Miami Herald reports that personal bankruptcies continue to increase in South Florida where filings in April were up over 50 percent from the same time a year ago.

According to the news source, personal bankruptcies are on the rise partly because more people are losing their jobs. In the case of Florida, the crumbling of the residential housing market is taking a toll on people employed or formerly employed in the real estate industry.

Almost three-quarters of South Florida's bankruptcy filings were from two counties - Miami-Dade and Broward - reported the Miami Herald.

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Financial trouble is causing stress for many people