Consumer Credit Counseling
As the consumer credit card debt problem has grown over recent years, so too has the debt counseling industry. Consumer debt counseling, has also grown rapidly, in parallel with the debt problems themselves.
Not everyone, though, may know what credit counseling is and what such services can provide. The following article is for those of you who do not know or are unsure.
What Is Consumer Credit Counseling?
If you have financial difficulties, you have almost certainly heard of the term “credit counseling,”. But do you really understand what it is?
The term consumer credit counseling is sometimes used in the context of debt negotiation or debt settlement However, it is really a completely different process. With credit counseling, you will actually work with a credit counsellor, who will help and advise you of the steps to take to pay off your debt in more affordable, smaller, monthly lump sum payments.
Those of you most likely to actually need credit counseling, are those who have been receiving phone calls from debt collectors, or whose accounts have gone to collection agencies. If you believe that you may benefit from using a service like this, please read the following outline of the best way to work with a credit counseling service.
1. You need to be able to identify a good credit counseling service, and not fall victim to one of the many scams that exist on the internet. Start by ignoring any advertisements that promise you quick fixes for your credit standing report. Put quite simply, there is no such thing. Instead, look for a reliable company accredited by Consumer Credit counseling Services, or similar organisation in your own country.
2. Next, you well have to meet with your credit counselor, and provide them with all of the details of your debt. Don’t be tempted to leave anything out. This will delude yourself and deceive the counsellor, unnecessarily. The counsellor needs to deal with facts. Most counsellors are very busy, so go to the first session prepared. Take as much relevant information as you can, even latest statements from the credit card and other companies you have debts with. The counsellor will need that information in order to create a workable repayment schedule for you.
3. It will now be time for the consumer credit counsellor to get to work for you. Hopefully, at this stage you will feel some of the pressure ease. The psychological burden of debt may start to lift. I hope so. The debt counsellor will contact all of your lenders, and inform them that you are trying to create a plan that will allow you pay off your debts. The counsellor will work with all your creditors, and co-ordinate a re-payment schedule that you can live with. Sometimes, they will be able to lower your interest rates in order to allow for lower payments.
4. Some consumer credit counseling services offer a debt management system. What, then, is a debt management system? Instead of having to keep up with all of the debt repayments yourself, you will have the option of submitting one lump sum payment to the credit counseling service and they will do it for you. One note of caution here: there have been cases of a consumer credit counseling service missing their client’s payments, and if that happens to you, your credit report will suffer for it. Knowing that, be sure to check out the company thoroughly before signing up for their debt management program. If at all possible, retain the responsibility yourself.
What will you pay for all of these counseling services? A reputable company will only charge you a small fee, somewhere around fourteen dollars per month in the US. In some countries you may find a free service.
That’s another way to know if you are dealing with a scam operation. If the counseling service demands a lot of money up front, it is almost a guarantee that they don’t have your best interests at heart. There is absolutely no need for you to lay out a lot of money. Take care in your decision making, and you will end up with the better solution
Finally, you should be aware that working with a consumer credit counseling service can do some damage to your credit standing and report. However, most people who are at this stage of need in their financial lives, and who would consider such a move, would most likely benefit from consumer credit counseling. After all, it is much easier to explain away an honest attempt to get your finances in order, than it would be to explain a bankruptcy, or a report riddled with charge-offs.
