When a Wisconsin resident is deep in debt, he or she is often desperate to seek relief. While filing for bankruptcy is a fairly common option, not many people know that a number of alternatives are available. In these debt situations, often the first step is to identify a credit counseling agency. It is important that a debtor makes the right choice when choosing a credit counseling organization because a wrong choice might prove to be a costly mistake with long-term consequences.

Often people turn to their financial institution, the local consumer protection agency and even family and friends for informal advice and, many times, these avenues prove effective. Additionally, branches of the U.S. Cooperative Extension Service, a number of non-profit credit counseling programs run by credit unions, universities, housing authorities and military bases are available. However, it is important to remember choosing a non-profit counselor does not mean services are free, affordable or at times, even legitimate.

A credit counseling agency’s role is to advise a debtor on managing income, assets and debt to address the debtor’s financial difficulties. The agency’s counselors are trained in consumer credit, debt management and budgeting. Their job involves understanding a debtor’s financial problems and helping the debtor develop a plan to resolve those problems.

Usually a reputable credit counseling agency provides free information about itself and the services it offers without asking for details about a debtor’s financial problems. The initial meeting usually lasts an hour and the agency offers follow-up sessions, if necessary. However, if the initial approach is otherwise, a debtor should seriously consider stepping away from that agency.

Once a debtor is comfortable with the credit counseling agency’s credibility, he or she should validate that agency’s reputation with the nearby consumer protection agency and the Wisconsin Attorney General’s Office to confirm whether there have been past complaints about the agency’s services. A debtor may also consult the list of credit counseling agencies that are approved by the federal bankruptcy trustee program for providing pre-bankruptcy counseling.

Source: Consumer.FTC.gov, “Choosing a Credit Counseling Organization,” Accessed on Jan. 8, 2015