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When budget and reality collide
I don’t bring this up to discourage anyone from contacting a legitimate credit counselor. Some people do complete their plans, and many others get much-needed advice on budgeting, credit improvement and other topics.

Credit counselors also are a key source of housing counseling; HUD-approved housing counselors help ready people to buy their first homes and advise them on navigating the mortgage refinancing and modification maze when their payments aren’t affordable.

Don’t confuse debt management plans with debt consolidation, where borrowers are offered one big loan to pay off their smaller debts, or debt settlement, where private companies offer to negotiate a lump-sum settlement, usually for a big upfront fee. Debt-management plans set up low-interest repayment plans so borrowers can pay off credit card debt over time.

But I want people to know that if they’re counting on debt-management plans as a way to avoid bankruptcy, the deck might be stacked against them. They need to consider all their options before signing up for a debt-management plan or any other debt solution.

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