NEW YORK (MainStreet) — Although a recent study released by the Urban Institute reveals that 35% of Americans have accounts in collections, most consumers are not reaching out for help.

"Consumers may be hesitant to reach out for help due to misconceptions about financial counseling. The National Foundation for Credit Counseling (NFCC) member agencies assisted more than 1.5 million people last year with their financial concerns, but that is a only a fraction of the 77 million Americans who have debt in collections, said Gail Cunningham, spokesperson for the NFCC.

"It is a shame that so many are struggling financially when help is easily accessible and affordable," she said. "Don't delay seeking help."

Consumers admitted to several misconceptions such as believing that financial counseling costs too much, according to the 2014 NFCC Financial Literacy Survey. Financial counseling rarely costs most consumers a dime - the truth is that counseling through an NFCC member agency is either free or low cost. One of the requirements for agency membership in the NFCC is that no service will be denied based on an inability to pay.

"Cost should never be a barrier to finding the financial help needed," Cunningham said. "To be automatically connected to the agency closest to you, dial (800) 388-2227 or find an agency online at"

While many people are loath to discuss their debt and find it embarrassing, it is highly likely that the trained and certified financial professional you visit with has encountered a financial problem similar to yours and is skilled at resolving comparable issues, she said.

Other consumers believe falsely that financial counseling agencies only offer advice, but are devoid of real solutions.

Instead, these solutions can lead to consumers not having to pay late fees so that paying down the principal faster can be achieved.

When a person has debt beyond what he can responsibly manage, NFCC members do offer concrete options, such as a Debt Management Program (DMP). A DMP allows consumers to continue to service their debt, repaying it in full, but often with a more affordable monthly payment, a lower interest rate and late fees and over-limit fees stopped or lowered.

Another myth that some consumers believe is that seeking credit counseling could damage their credit report and score. Credit counseling is not reported to the credit bureau and could not have a negative impact on a person's credit report or score. However, if a person elects to repay their debt through a DMP, the creditor may make a notation on the credit report of participation in the program. Graduates of the DMP often emerge with improved credit scores due to having paid off the debt through consistent monthly payments.

Other consumers believe mistakenly that debt settlement or bankruptcy seems like better solutions. Both debt settlement and bankruptcy are serious financial decisions which can negatively impact a person's credit report and score for years. Before opting for either, a person should first rule out all other alternatives.

Unmanageable debt results in severe financial consequences with realities that should not be ignored.

A blemished pay history reflecting late or missed payments tarnishes a person's credit report which could result in a lower credit score. A low credit score often equals a higher interest rate when borrowing money, making the cost of credit more expensive; in turn, a negative credit record could diminish access to additional credit needed for emergencies or unplanned expenses.

Although it is free, the survey found that 65% of Americans have not ordered their credit report in the past 12 months.

"This is a basic building block of financial success that is easy to do," Cunningham said. "It's your financial fingerprint, yet people aren't bothering to act on it."

If you are faced with ten outstanding bills, you always want to pay the most important bills first such as your apartment or a car loan, said Jeff Golding, CEO of WilliamPaid, a Chicago-based company which allows people to build credit through paying their rent online for free.

Many people are not even aware that they have a bill that is in collections. Errors are made due to a similar name or bills that were paid but recorded as late, he said.

"Lots of bills that are in collections are credit reporting errors, especially with people that move a lot," Golding said. "You could have an old cable bill that you thought your roommate paid. Since the notices are being sent to your old address, you don't even know about the outstanding balance."

Once your bills go to collection, consumers can negotiate the balance, he said.

"If you have an account in collection, I would certainly attempt to negotiate that amount and pay it off," Golding said. "For some people, it might benefit them to focus on paying their current bills to maintain their current credit score and once they have paid it off, to resolve their old debt."

Disputing errors and collections on your credit score helps you down the road and can save you money.

"At some point in time, if you have a bad credit score, it may prevent you from obtaining other credit," he said. "You may end up borrowing money at a higher interest rate and it could cost you more money in the course of time."

The best course of action is to get into good payment habits and manage your debt properly, Golding said.

"It's important to be able to budget properly and save money for a rainy day," he said.

Consumers can try calling creditors and asking for a temporary hardship status, said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network. Some creditors may work out payment plans if you have had a true temporary hardship.

"If you lost your job but now have a new one and you've previously paid your bills, they might give you a break," he said.

Debt consolidation is another options and means you combine debts to have one interest rate and one payment to focus your efforts.

"People can do it themselves by borrowing from a friend, a bank or a loan service or seeking more risky options such as getting a home equity loan or a vehicle title loan to pay off credit cards," Gallegos said.

--Written by Ellen Chang for MainStreet