Do You Need Credit Counselling?
If you think you need credit counselling, chances are you are in the midst of a financial collapse. It is sad to note that people decide to seek counseling only when they are already being harassed by creditors. Nevertheless, no matter how late in the game your decision came, a credit counselor will be a big help. A credit counselor will not promise to get rid of your debts. Instead he will assist you be eventually debt free.
Ideally, you should seek credit counselling the instances you start missing out on your monthly amortizations. When you are unable to pay the minimum amount required for your bills you should start finding solutions. Trying to meet monthly obligations when you know you actually cannot, will make you plunge into bigger debts.
Most credit counselors assist individuals with unsecured credit. Unsecured credits can come in the form of credit card debts and personal loans. They usually do not handle secured loans such as car loans and loan mortgages. They will only work on your secure loans when they are trying to draw up a repayment program for your entire debt load.
What exactly will a credit counselor do? A credit counselor will negotiate with your creditors the best ways you can repay your debt. He will provide you with all available debt management services. If your debt does not fall within the scope of a debt management service you have no other option but to declare bankruptcy.
Debt management services provided by a credit counselor includes among others:
- Analysis of your financial status.
- Negotiate a more feasible interest rate with your creditors/
- Assist is creating a repayment plan.
After all these things have been accomplished, a credit counselor will proceed to provide debt management service. If a client is in a debt management program, you will pay his credit counselor a pre-determined fixed monthly amount. The credit counselor will then take charge of paying all his creditors. The amount of the debt management service may or may not still include the counselor’s service fee.
Creditors that a credit counselor will pay under a debt management services are only those that have been declared as part of the service. If you have other creditors that are not included in the repayment scheme program, you will have to pay them yourself. You should however inform your counselor of any creditors you will pay yourself.
A credit counselor charges his fees two ways. First is of course the counseling fee they charge. Second is the rebate they are entitled to receive from creditors when they are able to successful negotiate a repayment plan.
Utmost care must be made in choosing a credit counselor. There are some fly by night companies who claim they can give topnotch counseling services when in fact they are out to scam you of your precious funds. They will charge ridiculous fees and get lost without doing anything in your behalf. Credit counselling aims to help you manage your debt and not get you into deeper debt.
