This type of debt relief is best suited to people who are struggling to make the required minimum monthly payments on their credit card debt. However, you must be committed to making changes about how you manage your money, not just attracted to the idea of someone helping to get you out of debt. You have to participate in the program, and success is going to require the dedication of your effort and time. A good credit counseling program will help you learn how to get control of your finances by living without using credit to make ends meet, and accomplish this goal with the amount of money that you bring home. This process is called, “budgeting”.
- Credit Counseling
- This form of debt consolidation, also referred to as debt management, combines a consumer’s unsecured credit debts into one monthly payment that is made through a company that, in turn, makes payments to each of the borrower’s creditors.
Where Can You Find Credit Counseling Services?
We feature a list of non-profit credit counseling firms that provide these services throughout the United States, or you can find companies to help with debt problems by using the pull-down bars above. In the case of shopping for any personal financial service: 1) Be sure to check out any provider of debt help or loan programs with your local BBB for a complaints. 2) Check the company out with your state government’s web site for a complaint history and license status. 3) Search the Internet for the company name to see what has been written about them.
+ Pros: Once consolidated, the required monthly payment is usually less than what you would be paying your creditors, if you continued to pay each of them individually. This is because credit counseling firms are often able to negotiate lower interest rates with the creditors that you owe. To a credit card company, receiving payments on your balance each month, even though it is a change from the credit agreement, is preferable to some other forms of debt relief, such as a chapter 7 bankruptcy. Another benefit, although mainly psychological in nature, is the consolidation, itself. When you are struggling to keep track of and pay on a bunch of different bills each month, it is considerably easier to focus on just making one. And, as opposed to debt consolidation loans, debt management is not an extension of credit. Enrollment is substantially easier than obtaining a new loan.
In some cases, credit counseling companies are able to offer pre-negotiated benefits with certain creditors. Because these firms’ business is to negotiate with creditors, they have (over time) developed the sort of relationships that make this type of benefit possible. Specialized repayment options often include the waiving of certain interest and late fees. Without the cost of these fees added on, the required monthly payment can be much lower. The lower the payment, the sooner you can get out of debt.
– Cons: You will be required to stop using all of your credit cards and to enroll them in the debt management plan. Receiving possible creditor benefits is based upon the consumer giving up the use of their credit cards. In other words, in order for the creditors to make some concessions, they are going to need to be assured that you will not be able to continue racking up the balances on your credit cards.
Also, keep in mind that enrolling in a credit counseling program may have a negative impact on your credit record. The credit card companies and other unsecured creditors, that you enroll in the plan, may report this information to the credit bureaus. So, deciding to take this step should not be taken lightly.
DebtConsolidationLoan.com – Do you need to consolidate credit card debt and get relief from your monthly bill payments? Use the menus above to find companies that provide debt consolidation and other forms of related help to consumers. Browse by service type or your state of residence. Get more advice and find useful financial tips in our consumer finance help section.