Credit counseling debt relief is another possible option for consolidating debt that may offer a better alternative to obtaining additional loans while still helping you avoid filing for bankruptcy.
Each year, over 2.5 million Americans use a credit counseling service or credit restoration company, and with a struggling economy,this number continues to rise. The average family carries a balance on more than one credit card, and household budgets have become a juggling act just to make ends meet.
Statistics show that, over the course of your lifetime, you will pay an average of $600,00 in interest alone. While the bulk of this amount can be attributed to mortgage and car payments, a large portion is from miscellaneous loans and revolving debt such as credit cards. Imagine how much lower your monthly budget could be if you didn’t have to pay all that interest!
Debt Management Plan:
Allows you to see what is involved and whether it fits your financial needs.
Is compounding interest eating away at your finances? Do you have a hard time paying your bills? Do you find it difficult to stick to a budget? Are you struggling just to make the minimum payment on your credit cards? Are you borrowing from one card to pay another, or are you applying for additional credit just to cover expenses?
If your bills have become overwhelming and you feel like you will never get ahead, then credit counseling for debt relief may be able to help.
What Can Credit Counseling Do for Me?
A trained credit counselor will work one-on-one with you to help devise a plan that fits your family situation and budget. Most reputable agencies will provide the following services:
- Communicate with your creditors on your behalf. This means no more stressful collection calls.
- Negotiate late fees, interest rates, and term lengths.
- Establish a repayment plan for getting out of debt
- Disperse funds to creditors
- Provide money management advice, financial education, and workshops
- Help you devise a workable budget
Read about what Alicia has to say:
After being out of work for two years, I am finally in the process of catching up on my monthly bills.
When I initially got laid off from my job, I was able to make minimum monthly payments because I was getting weekly unemployment benefits. However, once the unemployment benefits ran out I started getting behind on my bills. Once this happened, I sought assistance from a debt counseling organization.
After my first appointment with a debt counselor, I was able to make arrangements with most of my creditors. Because of this, I have been able to catch up on my mortgage and credit card payments.
Because of my positive experience, I would definitely consider working with a debt counseling agency again but am working on managing my money so I won’t have to again! 🙂
What Will I Have to Do?
Depending on your financial situation, the specific requirements may vary; however, most people will be asked to:
- Make one monthly payment to the Credit Counseling Agency. This amount will be agreed upon by your creditors and will fit your new budget. The agency will then disperse the funds to your lenders on your behalf.
- Close all credit card accounts.
- Refrain from obtaining additional debt during the duration of the program.
- Meet with your credit counselor to discuss financial management and create a workable budget. Some people may be asked to attend some form of budgeting or financial management training.
How Much Will Credit Counseling Cost?
Most agencies will charge a minimal fee for their services. However, many not-for-profit CCCS agencies do not charge for the initial consultation, so it won’t cost you anything to get some expert advice.
How Long Will It Take To Get Out of Debt?
A debt management program can take between 3-7 years to complete, depending on how much debt you have and the amount that you are able to pay each month.
When Is Credit Counseling a Good Option?
If you are experiencing the frustration and stress of financial struggles and you are being overrun by collection calls or late fees, then a credit counseling program may provide the relief you are looking for. However, you must be able to create a budget that will allow you to pay your creditors an acceptable amount each month.
Debt consolidation can be a good solution, but it is not right for everyone. It is important that you do your research and weigh your options before committing to any long-term debt management plan.
Articles are listed with details about how CCCS works and tips to help you decide if it is the right option for your financial situation.
- What Is Consumer Credit Counseling (CCCS)?
- Debt Consolidation Programs Glossary (Dictionary)
- Credit Counseling … Preparation & Procedures
- Debt Counseling Limitations
- Debt Consolidation Service Companies
- Consumer Credit Counseling Services
- Debt Consolidation Questions
- Debt Consolidation Tips
- Consolidate Debts
- Credit counseling debt relief options
Here is what Mike had to say:
As an 18 year old, I was financially clueless. I never kept track of my bank account and kept my credit debt balanced in my head. Because of this, I was regularly broke.
When I visited a credit counseling organization, they set me up with a reasonable budget including leisure money. They also provided me with an opportunity to consolidate and reduce my debt gradually through monthly payments.
It took quite a while, but I was saving money every month and was able to completely pay off my outstanding debts thanks to the debt consolidation plan that was provided.