What do you do if you are having problems with your marriage? Most people will either get some marriage counseling or file for divorce. What do yo do if you are having problems with your finances? Well, similar to marriage, you would either get some financial counseling or file for bankruptcy.

Either you try to work out your problems or you simply throw in the towel and give up completely so that you can make a fresh start. However, it may be quite a bit easier to make a fresh start with a new spouse than it is to make a fresh start financially.

Only the First Step

Getting debt counseling is only the first step to financial recovery. Although it is certainly an important step, it's only the beginning. You still have a long ways to go before you can be debt free.

A debt counselor may be able to guide you in the right direction but in the end, the major decisions will be left up to you. You might choose to take one of many different paths.

Some of the suggestions that you may receive include getting a debt consolidation loan, using a debt negotiation service or even filing for bankruptcy. Most counselors will try to help you avoid bankruptcy.

After debt counseling, the next step is to actually follow the advice of a debt counselor. In some cases, this may simply mean that you need to practice better debt management but for most people, they have already passed this point and will require a more earnest intervention through debt consolidation.

The process of debt consolidation is intended to relieve you from your debts without resorting to bankruptcy. For most people, bankruptcy is completely avoidable. There are simply better options that need to be considered.

To avoid bankruptcy, you will need to consider your options very carefully. As stated previously, this can best be done in conjunction with the services of a debt counselor. One of your options may include taking out a personal debt consolidation loan.

The main problem with personal loans as a means for clearing up unsecured debts is that these types of loans may be difficult to qualify for. As a general rule, if you are at the point where you are seeking debt counseling, your finances and credit rating have probably suffered to the point where it would be difficult, if not impossible, to qualify for a personal loan.

One way to get around this problem is to use the equity in your home. With a home equity loan, you could pay off all of your unsecured debts. In general, these types of loans come with a fairly low interest rate. On the down side, these types of loans can be risky. You would be gaining the chance to lose your home.

Other than loans, your other course of action could be to use one of the debt negotiation services. These types of services can help you to lower your monthly payments so that you can continue making payments and eventually repair your bad credit.

The debt negotiation services work in a different way than a traditional debt consolidation loan. Like debt consolidation loans, these types of services promise to lower your monthly payments that you make to your creditors but they take a different approach to the problem. In most cases, no loans are involved.

You simply pay the debt negotiation service a monthly fee. This fee is usually at least 50% less than what you were previously paying for your combined unsecured debts.

The debt negotiation services make deals with your creditors. They have been doing this successfully for many years so they are well practiced in the art of negotiation. They can get your creditors to significantly lower the amount of money that is owed to them or they can get them to lower the interest rate, or both.

Their job is to get the combined monthly payment down to a lower amount than you are actually paying them. Then they keep the difference as their fee.

Please note that this is a very simplistic explanation for how debt negotiation services actually work. Once you make contact with one of these services, they will give you a complete explanation for how their services work.

In the end, whether you choose a debt negotiation company or one of the other services that we have mentioned here, you will most likely be much better off than if you simply chose bankruptcy.