If you have high debt, and are in trouble, you have probably heard the term “credit counseling,” but do you understand what it is? Oftentimes this term is used in the same sentence as debt negotiation or debt settlement, but actually, it's a completely different process. With credit counseling, you will actually work with a professional credit counselor to pay off your debt in lower, monthly payments that you can afford.
The people most likely to need credit counseling are those who are receiving troubling phone calls from bill collectors, or whose accounts have gone to collection agencies. If you think that you may benefit from using a service like this, please read on to find out the best way to work with a credit counseling company.
First, you'll need to be able to find a good credit counseling company, and not fall victim to one of the many credit counseling scams that are out there. Start by avoiding any ads that promise you quick fixes for your credit report. There is no such thing. Instead, look for a reliable company that is accredited by Consumer Credit Counseling Services.
Next, you'll have to meet with a professional credit counselor, and provide them with all of the details of your debt. Don't be tempted to leave anything out because they will need the information in order to create a re-payment plan made just for you.
Now, you can sit back and allow your professional credit counselor to work for you. They will contact all of your creditors and inform them that you are trying to create a plan that will allow you pay off your debts. They will work with them all and coordinate a re-payment schedule that you can live with. Many times, they will be able to lower your interest rates in order to allow for lower payments.
Some credit counseling services offer a debt management system. What is it? Instead of having to keep up with all of the payments 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 instances of a credit counseling services paying their client's payments late, and if that happens, your credit report will suffer for it. Knowing that, be sure to check out the company thoroughly, by checking references, before signing up for their debt management program.
What will you pay for all of these services? A reputable Credit Counseling Service will only charge you a small fee, somewhere around fourteen dollars per month. If they are asking for alot of money up front, they may not have your best intests at heart. Be on the look out for potenial scams.
You should also be aware that working with a credit counseling service can do some damage to your credit report. However, the good does out weigh the bad. After all, it's much easier to explain an honest attempt to get your finances in order than it is to explain a bankruptcy or a credit report full of charge-offs.
Consumer Credit Counseling Help
Many people across America have dug a deep hole with debt and find it hard to escape this burden. With so many people having problems with debt, new credit counseling agencies spring up to help people get out of the debt they owe. Although there are many great credit counseling companies, there are also those that are fraudulent that can cause even more damage to your credit. It is important that you know what to look for in a great counseling company so you can avoid fraud.
Look for NonProfit Companies
If you need credit counseling, consider looking for companies who run as a nonprofit. You should only use these companies as a last resort and not as a way to escape your commitments to your creditors. However, if you feel you cannot manage your debt load, you should seek help to find a solution to your financial problem.
On the other hand, if you can take small steps to pay off your debt without outside help, you will build good money management skills. You can, for example, call your creditors and explain your situation. This means you have a chance to hear what the other party thinks about your delinquent account. Most times it is not what you are thinking. Most creditors prefer to work with you to help you repay as much money as possible. They don't want you to declare bankruptcy because they stand to lose all their money.
You can also decide to make a larger payment on your credit cards. This may mean taking another job or selling some of your valuables, but it is a step in the right direction. However, if you decide to work with a credit counseling firm, you should do careful research about the company. Check with the Better Business Bureau in your local area to see if there are any complaints on file. You could even have a friend visit the company and pretend she is looking to work with the company.
Avoid Fees
A warning sign that a credit counseling company may be fraudulent is if they require that you pay any fees before they begin working with you. While a small fee may be all right, a company charging excessive fees may cost you more money in the long run and offset any savings you might get from consolidating your debts. Remember that you want to lower your debt, not add any extra costs to your existing debt. If the fees seem unreasonable, you may want to ask your friends about them.
False Advertising
If you are looking for a credit counseling company, you should avoid those companies that offer a quick fix for your credit. It likely took you a long time to amass your debt, and there is no program that can help you get out of debt overnight. If the company promises to wave a magic wand and wipe out your debt, or fix your credit history without any effort on your part, there is a good chance that they are a fraud. Often, any steps they might take to try to fix your credit may be illegal and cause you more harm than good.
Unsolicited Emails
If you are in need of a credit counseling company, it is important that you go and look for a company yourself. Many people receive unsolicited emails offering credit counseling and, many times, these are scams. If you contact a company and then they contact you, this is acceptable. But those who come looking for you are usually companies to stay away from.
Credit counseling can be an important way to help you get control of your debt, especially if you are close to bankruptcy. If there are ways that you can help yourself work to get out of debt, this may be a better answer than turning to a counseling company. If you do find yourself in need of a credit counseling company, be sure to check out the company to be sure that they are legitimate. Remember that choosing the wrong company can get you into even greater debt.
Both Dave Robinson & Antonio Silver are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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