As you analyze your financial situation, perhaps you realize that your credit is not so great and many of your bills are past due.  You feel as though you are rapidly sinking in a financial pit.  This type of financial crisis may cause you to seek guidance from an outside source. You might ask, "Is it time to speak with a credit repair counselor?"  Don't be dismayed.  This very question is asked on a daily basis by thousands of people who feel the same about their finances.

First, weigh the pros and cons of using a credit repair counseling service.  The pros are you can possibly relieve your situation for the time being by getting payments reduced and maybe even saving on late fees and interest rates.  A credit repair counselor can negotiate better terms for you with all or most of your creditors, which can remove a huge load of pressure if you have many debts that are past due or delinquent.  Another advantage is the counselor may help you determine a better way to budget your finances so you can avoid future financial woes.  If you agree to a debt repayment plan, you'll likely only pay one payment to the credit counseling service versus several individual payments to creditors.  This one payment will likely be less than all other payments put together, so this can save on your monthly expenses.

On the negative side, you might have to extend your payments out for many years by re-negotiating the terms.  For instance, a debt that would have been paid off in five years might now take ten years to pay off.  You should also choose your counselor carefully.  Some may have hidden charges that you can only catch by reading the fine print.  You'll also be putting your finances in someone else's care.  This is fine if the company is dependable, but can be devastating if the service does not keep its end of the bargain.  Your creditors should be paid on time every month once you enter a dept repayment agreement.  And don't be afraid to call your creditors from time to time to make sure your bills are being paid!

Can You Negotiate?

Consider whether or not you will be able to negotiate with creditors and collection agencies on your own.  Some are easy to work with while others are not.  Some may offer huge discounts for early pay-off.  Others will expect payment in full, without any payment options.  It really depends on the creditor and how valuable they perceive your offer to be when you agree to pay back the debt.  Also, consider interest rates.  Can you negotiate a better rate with your credit card company?  If not, using a credit counselor may help you do this.  Many credit card banks are willing to drop or at least lower interest rates if they know you have entered a debt repayment program.  If you contact them on your own, however, you might not get very far.

Do You have Enough Discipline in Spending?

Don't deceive yourself.  If you have a difficult time managing your money, you might find yourself in a bind again very soon....even after negotiating better terms on your own.  Creditors might not be so gracious the next time around.  Ask yourself, "Can I make a solid commitment to the creditors if they will meet me half way?"  If not, it's a good idea to seek counseling services.  With a counseling service, you'll be dealing with one company instead of several.  You'll be accountable to your credit counselor for not only making payments each month on time, but also sticking with your commitments based on budget counseling.

If you are only behind on one payment or so but feel that your financial situation will not improve soon, it's good to seek counseling early.  Don't allow more and more bills to pile up.  The more quickly you can start counseling, then the less likely you'll mess up your credit score or history.  It's wise to get help before debts show up on your credit.  But if you've waited too long, counseling can help you dig out of the pit and start afresh.

Be realistic about your situation and don't hesitate to seek help if you need it.  The only pride to avoid is that of feeling you can handle everything on your own!