Credit counseling is a term used along with debt negotiation or debt settlement but should not be mixed with them. In credit counseling, you use the services of a professional credit counselor to repay your debt in reduced, monthly payments that you can easily afford.
Eligible candidates for credit counseling are people who get harassing phone calls from bill collectors, or whose accounts have been handed over to collection agencies. This article details the best way to work with a credit counselor.
Start by looking around a good credit counseling company, and not become a victim of one of the various credit counseling scams that are prevalent today. Do not be misled by any ad that assures you quick fixes for your credit report. This is an impossible promise. Instead search for a honest company accredited to Consumer Credit Counseling Services.
Then fix a meeting with a professional credit counselor, and apprise them about your debt situation. Do not omit anything as they will require the entire information to draw up re-payment plan according to your situation.
Then wait and let your professional credit counselor work on your behalf. They will get in touch with your creditors to tell them that you are attempting to chalk out a plan that help you clear the debts. They will coordinate with them and prepare a re-payment schedule that will let you pay comfortably. Lots of times, they can decrease your interest rates to help you make lower payments.
Few credit-counseling services provide a debt management system. It s a system wherein instead of making all the payments yourself, you can make one lump sum payment to the credit counseling service and they will take care of the rest. Be warned however, in some cases the credit counseling services have delayed making their customer’s payments. If it happens, your credit report will be damaged. So investigate the company properly, by asking for references before registering for their debt management program.
A good Counseling Service will levy a nominal fee of just about $14 each month. If they ask for a heavy fee up front, then they may be more likely to cheat you. Beware of the likely scams.
Also remember that using with a credit counseling service can harm your credit report to some extent. But the benefits are more than the drawbacks. Trying to show that you are sincerely trying to pay off your debts is much better than to explain a bankruptcy or a credit report filled with charge-offs.
Tags: counseling, Credit Counseling