There has been a new emerging threat to the financial sector of most developed countries. The introduction of plastic money and a tremendous acceptance of the same among both business organizations and consumers have given rise to a situation where consumer debt today has touched an all time high. Coupled with that is the fact that personal savings have hit an all time low.

Whenever you have bad credit the best thing to do is to act immediately. The more you delay your action the more difficult will the situation get for you to keep under control. And after a point of time it can spiral out of your any control. Then the threat of bankruptcy will loom large over you. So it is advisable to act fast and act quick.

The right time to act is when you fall back on a payment or two. If you don't act now, then chances are you will miss a few more similar payments and soon you will have too much of a debt to handle. You will already have few months of bills pending. To add to your woes will be the interest for the failed payments.

Before you go to any credit counselor it is advisable that you do your own homework. Take a piece of paper and write down on it everything you owe. Then make a separate spreadsheet where you write down all the sources of income you have. See what is the difference between what is coming in and what need s to go out. If that difference is not that great then you can think of taking up a part time job for the period of repayment of the loan and handle the matter by yourself.

But if situation seems completely hopeless and you think you will have to declare yourself bankrupt then is the time when you must consult with a debt management or credit counseling service. They have experts in their panel and they would know much better than you do on how to handle your debt. They will help you chalk out a plan on how exactly you will need to plan your future to repay your debt and better manage your credit in the future. if required they will even negotiate with your creditors to get you more friendly interest rates or longer periods to eliminate your debt.

The credit counselors try to find a middle path. They negotiate with your creditors so that the creditors relax the interest rates slightly so that it becomes easier for you to pay back. The creditors opt for this because they get their capital back with some interest and they don't have to go to the court and drag the matter on.

But why would the credit counselor help you? Of course he has his own benefits. First of all he will charge you a start up fee for the counseling process. This can vary from firm to firm but it should not be more than $200. There are various clauses in the start up fees and you should read them properly before you select your counselor.