Is Consumer Credit Counseling Right for You
Millions of Americans are struggling to pay their credit card bills and as of this writing it is not getting any easier. With unemployment remaining above 10%, more and more consumers are reaching the point where they can no longer afford to pay their credit cards.
There are several options available to cardholders including debt settlement and declaring personal bankruptcy but those two choices can be absolutely devastating financially and, in fact, can have a devastating effect in other areas of people’s lives.
What we are going to focus on in this article is consumer credit counseling services, which are also known as debt management and debt consolidation companies.
How Credit Counseling Services Work
Credit counseling services employ professional credit counselors that have been trained to work with individuals that find themselves drowning in debt. In the vast majority of cases they work with people with credit card debt that they can no longer afford.
It’s actually a rather straightforward process. The credit counseling service negotiates directly with the credit card companies on the consumer’s behalf to lower, or eliminate the interest rates charged on their credit cards.
They also negotiate to eliminate late fees and penalties while working out a monthly payment schedule that their client can afford.
In the end the process should take 4 to 5 years by which time the consumer should be completely debt free. If, of course, they stay on the program and make all of their payments.
Once the program begins all credit card accounts are closed regardless of how much or how little of the credit limit on the individual credit cards remain.
The consumer will then make a single monthly payment directly to the credit counseling service. The credit counseling service will then in turn distribute payments to all of the creditors in the agreed-upon amount.
The great advantage of using a credit counseling program is that as long as the monthly payments are being made on time there should be no ill effect on the consumer’s credit rating.
If you think this may be a program that would benefit you then we encourage you to contact a consumer credit counseling agency in your area. You can find one by contacting the National Foundation for Credit Counseling at www.nfcc.org.
Related Information:
- Consumer Debt Falls for the Seventh Straight Month Consumers continue to cut debt in the face of this seemingly endless recession. The Federal Reserve Board reported that August represented the 7th consecutive month that consumers have reduced their...
- Consumer Debt Continues to Decline The amount of credit card debt that Americans currently hold has fallen a remarkable $86.2 billion from its peak of $975.2 billion in September 2008. That’s nearly a 10% decline...
- $200 Billion Consumer Credit Loans On The Way The Federal Reserve Board, in conjunction with the Treasury Department, has announced that a new $200 billion dollar consumer credit stimulus plan will go into affect on March 25th. The...
- Credit Card Issuers Are More Willing to Help Struggling Cardholders It used to be that people that struggled to pay their bills turned to credit counseling services to negotiate repayment plans. It is now gotten to the point however, that...