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• Meet with
your credit counselor: You must give your credit
counselor all the details of your debt. If you hold out on any
information, it may be difficult for your counselor to get the
job done. The credit counselor will review your finances and set
up a budget for you, which you will have to adhere to, to get
out of your situation.
• The
credit counselor will work for you: The counselor
will work out a plan that will involve approaching all your
creditors and arranging a suitable and more manageable repayment
schedule. Often, they will be able to lower your interest rates
to allow for lower payments. Then, the counselor will either set
up a monthly repayment plan or all the payments will be
consolidated into one single payment which you will be
responsible for. Usually, this amount is paid directly to the
counselor who then provides it to the debtors. There will be a
built in fee which the counseling organization will receive for
negotiating between the two parties. Although most credit
counseling companies advertise themselves as “Non-Profit”, they
still charge a fee for their services. |
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Credit counseling has been around
for many years and is probably the most effective solution for
regaining control over your finances and avoiding credit and
debt problems.
While looking for credit counseling, be aware that there are
many unscrupulous companies that are predatory in nature and
look out only for their bottom line. Watch out for companies
that ask for a huge fee right upfront and try to get you to make
settlements with your creditors rather than repay the loans.
Instead, look for companies that focus on reducing your interest
rates and payments and work as an arbitrator between the
creditors and you. Ideally, they should be members of Better
Business Bureau.
Working with a credit counseling service can damage your credit
report but for most people who have financial problems, this is
an effective to get back their good credit rating. Credit
Counseling is usually a very effective means of paying off debts
and avoiding bankruptcy. But as in all things, make a thorough
and knowledgeable decision that credit counseling will actually
benefit you rather than harm you.
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