Many people today find themselves in a huge amount of debt. You have enormous credit card bills and loans. You are falling behind on your debts, and your credit score is rapidly declining. Your debt is uncontrollable, and no end is in sight; therefore, you need to find some way to eliminate your debt. When your debt is out of control, consumer credit counseling could be the solution.
Consumer credit counseling organizations are designed for individuals that have huge amounts of debt and are struggling to meet financial obligations. You can work with a credit counselor that will educate you on how eliminate your debt and stay out of debt. Counselors are qualified to come up with a plan and a repayment schedule. Consumer credit counseling agencies will contact your creditors and negotiate your debt. The creditor might agree to waive the late fees, and they might agree to lower the interest rate. The consumer credit counseling company will ask for your income information to determine if credit counseling is best for you.
A credit counselor will evaluate your debt and income, and he will determine which portion of your salary can be used to pay off your debts. You might have credit card debt, personal loans, student loans, medical bills or utility bills. The counselor will contact your creditors to settle on an amount that meets your budget.
Your accounts will be closed. Depending on your debt level, the counselor might suggest obtaining a consolidation loan. You will only be responsible for making one payment. This makes it easier to manage your debt. In addition, the interest rate and monthly payment amount would be lower.
After you sign up with a consumer credit counseling agency, it is important to keep the terms and conditions of your arrangement. It normally takes two to four years to eliminate your debt, which is why you need to be patient until the process is complete. If you terminate your relationship with the agency, the agreement will be cancelled. This means the interest rates will go back to what they once were.
Credit counseling could have a negative impact on your credit score at first because lenders will think that you have difficulties controlling your finances. However, your score could improve in the long run because you will be making payments on time. Delinquent accounts will continue stay on your credit for 7 years, and bankruptcy will stay on your credit for 10 years.
When choosing a credit counselor, search online and find several that you prefer. You need to contact them and ask them what services they provide. To control your debt, you need to ask if they help with debt management. You also need to ask about the fees that you will be charged. You want to make sure the cost is affordable. All companies should offer you a free consultation, and you should spend at least an hour meeting with them and discussing your options.
In addition, you need to ask if the company is licensed and accredited. It should be a non-profit organization, and it needs to have been in business for several years. It is important that you choose a reputable company. You want to make sure you can trust the agency to help with your debt problems. It is wise to check with the Better Business Bureau to see if any complaints have been filed against the agency.
Consumer credit counseling agencies can help you eliminate your debt while teaching you how to manage your money. The counselor will give you options and help you come up with a solution so that you can make better financial decisions and end up with a brighter future.
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Greg is a freelance writer in the personal finance blogosphere, and also writes for CreditGUARD, a non-profit consumer credit counseling agency with an A+ rating from the Better Business Bureau.