Credit repair and credit
counseling companies are organizations that will work with a consumer's
creditors on their behalf to help reduce the consumer’s debt load.They will also advise the consumer on how to
set-up a household budget and make better financial decisions.
Is credit card debt counseling
really beneficial?If you talk to ten
people, 5 will say yes and 5 will say no.With the financial crisis still ongoing, you see commercials everyday
from companies that claim that they are legitimate counseling agencies that can
help a consumer get out of debt.
After a consumer has contacted a
Credit Counseling company, the usual process is he/she will speak to a credit
counselor.The counselor will evaluate
the consumer's current financial situation by asking specific questions and viewing the consumer’s
credit report.The counselor will then
determine if they will be able to help the consumer.The next step is for the credit counselor to
set-up a Debt Management program designed to help the consumer get out of debt,
and provide advice and tools to manage their finances.The counselor will contact the consumer’s
creditors and negotiate a lower payment schedule for each of their credit card
accounts.The counselor will also work
to reduce interest rates and stop any late payment fees that are being
accrued.Once the counselor gets
approval from the creditors for the lower monthly payments, the consumer will
then begin to make monthly payments to the credit counseling agency, who will
then forward the payment on the creditors on behalf of the consumer; minus a
small fee for the counseling agency.
Before you decide to go down this
path, do some research on the company that you are looking to sign-up
with.Check to see if the company is a
member of the Better Business Bureau.You will also want to ask the following questions before you sign-up:
What services do you offer? (Look
for budget counseling and money management tools)
What are your fees? (Verify that
there are no HIDDEN FEES)
Are your counselors accredited or
certified?
How will the debt management plan
work? (What types of debts can be included in the plan)
There are definite benefits to
credit card debt counseling, but you need to be careful and avoid the shady
companies.Do your homework and sign-up
with a reputable debt counseling company that can actually help you get out of
debt.
Debt Counseling
