The good news is that bankruptcy went down to the tune of 13% in 2013. The bad news is that there were still over 1 million personal bankruptcies in 2013. A lot of people get in over their head and don't know where to turn. The last thing they need to do is spend more money trying to get their head back above water. If you feel like you're going under -- or just don't want to get to that point -- here are some tips to help keep you from becoming one of the statistics.
Start With Your Bank or Credit Union
One place that definitely doesn't want you going under? Your bank or credit union. That's why Thomas Racca, manager of personal finance management for Navy Federal Credit Union, the nation's largest credit union, recommends you start with them. "Credit unions especially offer free credit counseling both over the phone and in person," he says. "We take people through all their accounts, not just the ones they have with us."
Free Credit Counseling
"The best source of free financial help is nonprofit credit counseling," says Michael Sullivan, chief education officer at Take Charge America. He recommends that people head down for an hour or two just to get the lay of the land. "It's a great place to start and it doesn't cost you anything," he says.
Still, you're going to want to do some research, as not all credit counseling agencies are created equal. "Nonprofit or for profit, you're going to want to check them out with the Better BusinessBureau," says Sullivan, adding that "some nonprofits aren't the best option." When investigating with the BBB, you want to see at least an "A" rating and no outstanding consumer complaints.
Debt Management Versus Debt Settlement
Many people aren't even sure what the difference is between debt management and debt settlement. If you're feeling like you're going under, it's time to learn the difference between the two so you know which is best for you, your finances and your family. Sullivan explained the difference to us:
Which is right for you? This is an area where your new friend the credit counselor might be able to help you out.