Managing debt is a serious challenge for those who are overwhelmed by monthly credit card and loan payments. While bankruptcy is often seen as the only option for getting out of serious debt, credit counseling can be a financially feasible alternative. Even though credit counseling does not offer the immediate debt relief commonly associated with bankruptcy, it does not negatively affect a consumer’s credit score. When considering credit counseling, it is important to remember that not all credit counseling services are the same.
The majority of credit counseling agencies exist solely to help and educate consumers who are in serious debt. Quite a few require consumers to meet certain requirements (minimum amounts of credit card or unsecured debts) prior to offering to render services. These credit counseling agencies will reviewer the consumers’ monthly income, expenses, and debt to develop a reasonable repayment plan. A small fee is charged and broken into monthly payments to cover the cost of debt management courses, negotiations with creditors, and account management.
A few credit counseling agencies do very little to help consumers get out of debt in a responsible manner. These agencies promise to take over the payment of debts to reduce the consumers’ interest, but charge excessive fees. In many circumstances consumers have found themselves dealing with angry creditors who are not receiving payments in a timely manner. Quite a few less than reputable credit counseling agencies agree to make payments for consumers, but they do not guarantee that payments will be made on time each month. Consumers who sign agreements with disreputable credit counseling agencies often find their credit scores ruined because of the actions of the agency they have chosen.
Taking the time to educate oneself about a credit counseling agency prior to signing an agreement can save a consumer time and money. Research a potential credit counseling agency thoroughly by reviewing the testimonials of past clients and comparing their track record with the history of their competitors. If you are having a difficult time finding credit counseling agencies in your area, contact a local United States Bankruptcy Court, many clerks have a list of approved agencies that offer long term debt management for those who do not qualify for bankruptcy relief.
When you have selected at least three credit counseling agencies, schedule in person meetings to discuss your situation. If the agency is not local, request a phone consultation before agreeing to anything. During the consultation ask questions about how your debt will be paid, what non-debt related fees will be included in your payment plan, and how long it should take to repay all debts.
The decision to take control of debt is an important one which will positively influence the financial future of the consumer and his or her family. Before putting your finances in the hand of a stranger, be sure that they are able to prove that they can handle the responsibility of assisting with managing your debt.