Choosing a Credit Counseling Agency for Consumer Debt Counseling
The
consumer debt counseling industry in the U.S. owes much of its growth to the
unprecedented rise in consumer debt in the 1990s. Offering workable solutions to seemingly unceasing
personal debt problems,
consumer credit counseling services develop personalized
consumer debt counseling plans to help clients repay their debts and achieve
financial freedom. If you are unable to pay the minimums on your credit cards and have fallen way
behind on your regular bills despite your best efforts to honor your financial obligations, you may
be a good candidate for
consumer debt counseling.
How Consumer Credit Counseling Services Work
Individualized
consumer debt counseling is what sets
consumer credit counseling services apart from other debt management programs.
Participants in
consumer credit counseling services receive debt management
advice that is tailored to individual needs and circumstances. Professional
debt counselors work with clients to develop customized strategies for solving
current financial problems and preventing future difficulties. Consumer debt counseling clients are
taught effective money management skills that will enable them to meet their monthly financial
obligations while avoiding further entanglement in the consumer debt trap.
In addition,
consumer credit counseling services
negotiate with credit card
companies and other lenders for reduced interest rates, waiver of late charges and penalties
and lower monthly payments. After getting the lenders to agree to cut the interest rates and
minimum monthly payments,
consumer credit counseling services will develop an
individualized debt repayment plan for the consumer. Under the debt repayment plan, clients repay
their debts by making monthly deposits to the
credit counseling agency, which
remits the payments to the creditors. Unlike
debt consolidation companies,
consumer credit counseling services do not arrange or grant debt consolidation
loans for their clients.
Evaluating Consumer Credit Counseling Services
Because of the substantial profit potential of the
consumer debt counseling
business, the industry has attracted a number of unscrupulous
consumer debt counseling agencies purporting to offer effortless
debt elimination services.
These fly-by-night operators often charge hefty upfront and maintenance
fees and make ludicrous promises of instant financial freedom. To protect yourself from fraudulent
debt counselors, you must carefully examine
consumer credit counseling services based on these following criteria:
Accreditation, fees and terms of the debt repayment plan.
Legitimate
consumer credit counseling services are affiliated with the
Association of Independent Consumer Credit Counseling Agencies or the National Foundation for
Credit Counseling. Additionally, you may want to check with the Better Business Bureau to see if
a
credit counseling agency has received consumer complaints or been the subject
of a consumer investigation. The
credit counseling agency should employ
professional
debt counselors
who are qualified to provide
consumer debt counseling.
Consumer credit counseling services are broadly classified into non-profit and
for-profit. These
consumer credit counseling services may be provided free of
charge or at a reasonable cost. When choosing
consumer credit counseling services,
inquire about set-up and monthly fees. Be wary of
debt counselors who ask for
exorbitant upfront fees; the day you fork over the cash may be the last you'll ever see of them.
Make sure the debt repayment plan is adapted to your specific financial needs and situation.
You are more likely to stick to an individualized debt repayment plan than to a one-size-fits-all
scheme. Ask about how the monthly payments will be distributed to your creditors. Watch out for
consumer credit counseling services that have a record of missed or delayed
payments to creditors.
If you cannot find a suitable
credit counseling agency for your situation, you
might want to give
debt consolidation companies a try. With a debt consolidation
loan, you can be sure that your creditors will be paid. Furthermore, many
debt consolidation companies
now also offer personal financial counseling as part
of their services, so you can avoid getting into further debt.
For more information on Consumer Credit Counseling, visit:
