For individuals who find themselves in an overwhelming amount of debt, credit counseling may be a good option. Many people have heard about credit counseling but don’t have a firm grasp of what it is. As a result, if they don’t choose to investigate any further, they miss out on a debt relief option that has the potential of being extremely worthwhile.
Credit counseling offers individuals or families much more than the name suggests. At first glance, one might assume that it might merely involve sitting down and talking to someone about your finances. However, it includes much more than that. In the vast majority of cases, credit counseling companies will help you negotiate lower interest rates with whatever credit card companies you owe money to. They may also be able to help you get out of paying late fees and penalties. Credit counselors can also create a debt repayment plan. Your “job” will be to send them money (a predetermined amount) every month, which they will use to pay your creditors. Most will attempt to have you debt free in 3-5 years. You will likely have to pay them some type of fee, though you might not be required to if you are working with a non-profit organization that only accepts payment on a voluntary basis. Some don’t ask for any fees at all.
The Queen smiles at good debt management
Credit counseling can help you get organized financially, eases your financial worries and can also help you get back on track as far as just about anything else is concerned if you are willing to make things happen. Statistics show that 50% of the individuals enrolled in credit counseling programs don’t finish: it’s all up to you.
Though credit counseling is great for some people, it isn’t necessarily a good choice for everyone. Some people don’t need it and for others, it may be too late to do them any good. Below, we will discuss the tell-tell signs which might signal your need for credit counseling.
You are having trouble making the monthly payments on your credit card: First of all, if you are only able to make the minimum payments, you are already in trouble because you are merely staying afloat and not making in headway. If you find that you can’t do the latter (make the minimum payments), credit counseling may be a good option. These companies may be able to get you a lower interest rate, which will decrease your monthly payments, allowing you to keep more of your cash in your pocket.
You are having trouble paying your bills on time: Being late will hurt your credit. Most people understand this. Because a credit counseling company will be paying your bills each month, you won’t have to worry about being late. Now, this will only be the case if you choose a good company, one that is extremely professional. Your payments should also be cheaper if they are able to negotiate a lower interest rate, one which will make it easier to pay what you owe.
You keep getting phone calls from bill collectors: Bill collectors will call and hound you when you are consistently late paying your bills, if you have failed to make any payments nor made an effort to contact them and work out some alternative payment arrangements. If this describes you and your situation, it is a huge sign that you need help. Credit counseling may be able to improve your situation.
You have not been able to negotiate lower payments or interest rates yourself: Your debtors make the rules. They do not have to work with you or anyone else, not even a credit counseling organization. However, because they understand the value of such companies to their bottom line, if you are trying to make an effort to pay them their money back, this benefits them and they will be willing to work with some credit counseling companies. Many times, they have established relationships with particular credit counseling companies and will agree to be a little bit lenient. Typically, the companies they work with have been around for a while and have developed a reputation that revolves around integrity and professionalism. Some credit card companies will have a listing of credit counseling companies that they do business with. If you pick someone from their list, this significantly increases your odds of working with a really good company.
