What is Credit Counseling?
Credit counseling is a process offering education to consumers about how to avoid creating debts that cannot be repaid. It often involves negotiating with creditors to establish a debt management plan for the individual. A debt management plan may help the debtor repay his or her debt by working out a repayment plan with the creditor. Debt management plans, set up by credit counselors, usually offer reduced payments, fees and interest rates to the client.
Under a reputable Consumer Credit Counseling (CCC) program, your creditors may be willing to reduce your interest rates and waive over-limit or late fees. You will make one payment each month to the counseling firm, and they in turn distribute the funds to the creditors. In addition to making the monthly payment against your debt, credit counseling companies generally require upfront fees and regular monthly fees.
Credit Counseling companies work for the creditor. They are paid a commission of up to 15% of what they recover from you. Credit Counseling companies do not reduce the total debt you owe, but simply allow you to combine your total monthly payments in to one payment, which is often higher than your regular monthly minimums. Credit Counseling companies project a 4-6 year period for repayment of debts, but often this ends up being longer because individuals are unable to sustain the higher monthly payments and are dropped from the program, making it necessary to start over again with only a slightly lower balance. Approximately 65 – 70% of the people who enter this form of debt help are unsuccessful and fall off before the program is complete.
- The best thing for you to do to keep good credit is to pay your bills on time, in full, and on your own. If you need a little assistance, without seriously damaging your credit, Credit Counseling is the way to go.
- However if you cannot afford Credit Counseling payments, it will not work for you. Call or apply for a payment quote. If you have certain debts (such as certain collections, legal accounts, charge offs, medical bills, etc.) Credit Counseling does not offer any benefits (such as reduced interest, stop late and over limit fees, etc.) and therefore will not work for you.
- If Credit Counseling is not right for you, you would need to look at Debt Settlement.
Contact Debt Settlement Group today to find out which debt management option is right for you. Call now for a free, no obligation analysis 1-888-933-2879 or Start online now!