What Is Credit Counseling

By Sean A. Kelly

If you have a debt issue and has been actively seeking a solution, you may have come across the term credit counseling. Credit counseling is probably one of the ways you could try to resolve your mounting debt problems. It could prove to be a good solution to your financial problems.

If you are wondering what credit and debt counseling services entail, you may want to read on to find out more about it. The first thing you may want to know about signing up for a credit counseling service does not mean you are getting a standard service that everyone else is getting. In truth, the service will be custom-made to suit your financial situation so there is no such thing as an all-for-one program to help debtors resolve their debt problems. When you approach any debt counseling service, a certified credit counselor will be the main person to help you go through your financial situation and look for ways for you to pay down your debts. The counselor will probably need to look at your fixed and variable income, your regular and occasional expenses and all of your debts. So, with all these information on hand, the counselor will then be able to recommend you the right solution to your financial problem. The first recommendation the counselor may make will probably be to help you to cut down your expenses to the minimum. They could also help to reduce your credit card interest rates by contacting your credit card companies and negotiating for a reduction in the interest rates so that you could pay down your credit card debts faster. And if these methods could help you to slowly clear up your debts, they may even give you ample budgeting and debt education materials so that you will learn more about debt management and financial control in order to avoid getting back into debt in the future.

If the budgeting and cutting costs and expenses did not help, the counselor may then recommend other methods to help you out of your predicament. There are various debt management programs and clear debt solutions for you to choose from. So, based on your income, expenses and debts, a counselor could accurately propose a suitable program that fits your every need. You may want to know about the various debt solutions available to you. One of it is a debt management program. Under a debt management program, all your debts will be gathered into the program so that at the end of each month, you only pay one lump sum to the debt management company and they will pay up your creditors. That’s not all, your credit will be suspended and you will not be allowed to get new credit. This way, you will be focused on paying down your current debts and not be able to create new debts. This debt management method will probably effectively help you control your spending habits and help you to keep to your budget.

Sometimes, your financial situation may not be suitable for you to sign up for a debt management program but there are other options for you. Credit counseling services usually offer many types of solutions to your particular situation. Another solution you may be recommended to try is debt consolidation. In this method, your debts are streamlined into one single account and you may even get a lower interest rate. So you may even get to pay less each month. Even if debt consolidation is not suitable for you, there is another more extreme solution, which is debt settlement. Under this debt solution, the credit counseling company may negotiate with your creditors to reduce your debt balance. Once the negotiation is successful, you are only required to pay the reduced sum. This option is often the last drastic one to take especially if you are on the verge of bankruptcy and are facing large debt which you have no way of paying in full. This is because debt settlement comes with tax and credit implications.

Now that you know what credit or debt counseling is all about, you do not have to hesitate to sign up for such a service if you are at the end of the road with no way out of your mounting debt issues.

About the Author:

credit counselingcredit and debt counseling servicescredit counseling services

Source:

isnare.com

Permanent Link:

isnare.com/?aid=719672&ca=Finances