Over the past few years, a popular alternative to bankruptcy has surfaced.  Consumer Credit Counseling Services (CCCS), a nonprofit organization financed by credit card companies and other consumer finance organizations, is available to you to reduce some of your debt and create a plan to pay off your debt without the intervention of the Bankruptcy Courts.  If your debt is not too overwhelming and you have sufficient income, CCCS may be able to create a payment plan that allows you to pay back your debts over time.

     While CCCS is an excellent organization, if you are behind with your car or house payment, they may not be able to help.  Their concentration seems to be on the handling of your credit card.  Please note that CCCS is a non-profit orginization created by credit card companies and their mission is to assist you in paying back all of your credit card debt.  CCCS counselors are not attorneys and they are not required to discuss with you bankruptcy or other options although I have had some clients advise me that CCCS advised them that bankruptcy may be their only option.

 CCCS is not the only "credit counseling service" out there and you may have seen advertisements in the phone book, or on television ads or even nailed to a telephone pole or advertised through unsolicited mail.  Some of these services offer to clear your credit file or to get you a new credit file.  Usually, these organizations are rip-offs and you should avoid them.  A good rule  to follow is "if it sounds too good to be true, it probably is."

   Finally, if you do attempt to get your financial life under control , realize that it will take a great deal of both discipline and money to pay off substantial credit card debt.  Let’s say you have $10,000 in credit card debt and you want to pay it off in two years, in order to accomplish this goal, you will need to pay $520 per month or if you wanted to take three years, you will need $382 per month.  If you reduce the amount you are paying per month to say $200, then that $10,000 will take over ten years to pay off.

     Many times I have had clients advise me that they attempted to reduce the interest rate they were paying on their credit card debt only to find themselves even farther in debt when they miss one payment under that new rate. Credit card companies are notorious in jacking up the rate you pay to over 25% if you default on a payment.  Always remember to read your credit card small print to see how your account will be handled if you do default.

     Remember, interest rates at levels of   18% to 20% will increase your balances immensely.   You can figure out how long it would take you to pay off your debt by using an on-line calculator located at the Motley Fool financial web site. 

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