Credit Counseling
Credit Counselors are professional organizations that provide information, planning services and even financial agreements to help you payback your debt. If you find the right organization, this can be a great way to get out of your debt hole. However, there are both unscrupulous and incompetent agencies to look out for. Be aware that while many credit counseling agencies dub themselves as "nonprofit" - some are actually being funded by credit card companies.
What is Credit Counseling?
Credit Counselors are organizations that can offer a slew of services aimed at solving your debts problems. The best Credit Counselors have professionally trained staffs, are members of an industry association, will charge you a low monthly fee for their counseling and will develop a solution that will protect your credit rating as much as possible.
While some Credit Counselors will merely offer advice on your best options, some will provide full-service debt relief. Initially, you can expect to meet with them for a detailed review of your finances. They will then seek to get you lower interest rates, elimination of late fees, and protection from collection agents. They should be able to consolidate your debt into one monthly payment. They'll try to develop a schedule to eliminate your debt over a period (which should be less than 5 years). For their services, they typically charge a monthly service charge. In addition, many offer instruction of managing your money more effectively so that you don't incur any new debt.
What are the benefits?
The primary benefit is that you may be able to eliminate your debt while also learning to properly organize your finances so that you can avoid future problems. If you find the right Credit Counselor, they can save you a good deal of money and help instill better spending habits. The Credit Counselor should strive to accomplish this without negatively affecting your credit report. However, you need to be very careful when considering this option. The Fair Trade Commission (FTC) is getting a lot of complaints from consumers who have been ripped off by their Credit Counselor.
How to choose a Credit Counselor?
This is a big decision so it will pay off to spend some time doing the research to . We'd recommend that you follow the steps below:
Research, research, research - read all of the external links below then do additional research either on the internet or by calling governmental agencies for advice.Start with the associations - look at Credit Counselors who are members of National Foundation of Credit Counseling or AICCCA.
Compare Counselors - meet with several Counselors before making a final decision.
Check with the Better Business Bureau - to see if there are any complaints against a Counselor that you are considering.
Check credentials - inquire about what experience and training that the employees have.
Talk to references - try to talk to some of their previous customers and ask them about their experience.
Watch out for high fees - most credit counselors should have fees of less than $50 per month.
Check the math - some credit counselors will offer plans that don't actually save you money. Add up the full costs of their solution (include their fees) and make sure that this is your best option.
Where can I get more information?
Please take a look at the links below.
External Links
Please note: This website is designed to provide you with information about debt problems. However, this information should not be relied upon. The information does not constitute professional or legal advice. We also cannot take responsibility for content on sites that are linked to from our pages. Always obtain proper legal and other professional advice before undertaking any significant action.
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