Posted by Pat Raskob

Credit Counseling

Credit Counseling

Credit counseling is a process engaged in to help people especially debtors to settle their debts through education, counseling on budget, planning and also giving them enlightenment on the various tools with definite goals to help them reduce their debts and also clear off their debts.

Credit counselling agencies are those who carry out these credit counselling, empowered by the contract to act on behalf of these debtors to engage in negotiation with the creditors to help them clear off every debt that is beyond their capacity.

There are many people who are overwhelmed with the debts they need to clear off and are beyond their capacities and don’t even know how to clear them off. The best thing to do is involve a credit counselor who will stand for you in negotiation. These credit counselors help you get situations under your control.

Credit counselors are not just needed when you are under distress about your debts, but even when you need to plan your finances and credits, you can also involve them. You can involve them when you are having difficulties paying from your accounts, they will tell you the right method to use.

There are many credit counselors around that can help get the job done. They can provide several services like credit and debt counseling, student loan debt counseling, housing and mortgage counseling, and others. They also help in money management and budgeting. Their major goal is to help their clients from entering bankruptcy.

Most of the credit counseling organizations employ trained and competent staff with an understanding of communication and negotiation because these are the two highly demanded skills in this area. Also, these staff must understand relationship building between the consumers and the staff for effectiveness.

When these staff are competent, sometimes the creditors can agree that they will reduce their interests, or shift the payment dates. These staff can also negotiate with the creditors and make them reduce the monthly payments if it makes their clients feel overwhelmed. The DMP (Debtor management plan) demands for regular and timely payments. It may take up to 48months or beyond to complete his or her debt management plan.

Debt consolidation is a process that involves taking a consolidation loan to clear off your existing debts. Then you will plan on how to create payment plans toward your new loan according to the assigned interest rates by the lender.

Also, there are several nonprofit organizations that render credit counseling services either one on one, in groups, on calls. Some credit counseling organizations charge a high service rate which may hinder these consumers from hiring them. 

In other words, when considering involving a credit counseling agency, you must first pay attention to their fees. Some don’t accept half payment, so be ready to be fully committed financially before getting them involved. So, you must exercise caution and also ensure you know about the organizations you want to involve yourself with because some may be illegitimate. Good credit counselors are always concerned about their clients and their progress.

One of the red flags that should turn you off from involving a credit counseling agency or organization is when they begin to send every information about themselves and their services. Good credit counseling agencies don’t send private information to people freely without demanding it.

Some credit counselors have follow-up sessions scheduled for their clients for effectiveness. They create a personalized plan for helping their clients out of their difficult situations and to help them stabilize financially.

Finally, credit counseling is good when you are in debt and overwhelmed with it. These agencies help you to negotiate with the creditors and create feasible plans for you to clear off your debts.


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Pat Raskob
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