Undergoing a credit crisis is a common scenario in today’s world. It is very stressful for a debtor to receive debt collection calls and juggle with legal notices and calls from creditors. Credit counseling is one of several options available to a consumer experiencing debt problems. The most important thing is to know your options, and this is where credit counselors come to your assistance.
Credit counseling is a service provided for people who need help in managing their debts without having to resort to filing for bankruptcy. It is the process of educating consumers about steps to be taken to avoid huge debts by managing a well planned debt budgeting. These debt management plans help consumers to develop better financial habits and proper debt relief budgeting. Credit counselors provide financial assessment, personal financial counseling and financial education. After that, the credit counselor will provide you the available options such as negotiating, bankruptcy, debt settlement, or debt management.
Credit counselors negotiate with the creditors to reach a debt management plan by which debtors can eventually pay out all the debts, and does not have to elect for going bankrupt. By opting for debt management, the credit counselor prepares a plan to help consumers manage their debts on single monthly payments. They can help you pay off most of your debts in less than five years and be relieved from collection calls.
There are various credit counseling services that offer to negotiate with creditors and assist debtors to reach comfortable debt repayment plans. These credit counselors can talk to the creditors and make them agree to allow the debtor to pay out the amount on lower monthly installments with or without interest. This also helps the creditors because if the debtor opts to file for bankruptcy, chances of getting the money back be slim.
While negotiating with the creditors, a credit counselor will consider the income, expenses, debts, and assets of the debtor and arrange a solution. Credit counselors help in converting the debtor’s delinquent accounts to current and reestablish the creditors’ faith. This is done by making timely payments on the agreed debt management plans and creating a positive credit history.
There are nonprofit credit counseling agencies as well as agencies that provide credit counseling for prescribed fee. Links to nonprofit credit counseling agencies in all 50 states are provided below. Nonprofit credit counseling services are usually offered by governmental agencies, consumer associations or relief organizations as a social service. A good credit counseling service provider will help you set realistic goals and manage your accounts. They will educate you on how to read bank statements, understand credit giving, banking terminology, interest calculation, and savings and investing strategies. These credit counseling services not only help to repay all debts; but also to avoid finding yourself in the same situation again.