Will Counseling Save my Credit?
Posted By: Amber Singh | March 19, 2013 | 0 Comment(s)
How Does Consumer Credit Counseling Work?
Consumer credit counseling is a system set up to educate consumers on how to avoid debt and create a plan of debt relief. Consumers do this by having their consumer credit counseling services (CCCS) negotiate with creditors in order to repay debt by reducing monthly payment fees and interest rates. You will need to sign a contract stating that you will not obtain any more debt (such as loans) until your current debit is paid off in full, and afterwards you will start to make monthly payments. Your consumer service agency will then give the payment to your creditors.
Beware that CCCS does not relieve you of all of your problems. You may run into your report still claiming you as late because you might not be paying the full minimum payment, which will lower your credit score.
When do I really need Consumer Credit Counseling?
In reality a CCCS doesn’t do anything you can’t do yourself, all a CCCS does is give you guidance in how to best
approach your debt. So you need to ask yourself, “Can I be more productive on my own?” As a consumer, you can still contact creditors yourself and negotiate the payment terms on your account. CCCS does help you stay on target with your financial obligations, and if you aren’t confident with staying on track on your own, CCCS will help you with that.
Consumers should especially consider and look into CCCS if they need bankruptcy advice or if you are falling behind on your mortgage.
What to look for in a CCCS?
- Organizations that have several financial services, not just debt management plans. Look for services such as debt management classes and budget counseling.
- Free educational materials and information about their agency.
- A specific monthly fee.
- A plan for managing debt that makes sense to you. Don’t sign something you don’t fully understand.
- Organizations that are licensed to provide financial management services by the state.
- Counselors who are certified and trained.
When looking for credible CCCS, you can contact the United States Trustee Program for a list of approved credit counseling organizations.