Are you looking to rest easy at night knowing that creditors won’t be calling you at all hours? The moment you stop paying your bills or you default on credit card debt is the moment your phone won’t stop ringing. Once a company gets ahold of you, they will stop at nothing until they get their money back. It is understandable of course, but from a consumer stand point, you also have rights.
Many people lose their jobs and others are just bad at budgeting, but regardless of which category you fall into, credit counseling services can help change your life. Professional help can offer you a whole new way of looking at your life, and even though things may seem bleak right now, in just a few short years, you can bring your credit rating back up.
How Credit Counseling Can Save You From Debt
Are you new to the whole concept of building credit? Have you just gotten denied for the umpteenth time when trying to get a credit line? If so, a credit counselor can help represent your interests and speak to lenders in order to plead your case. More often than not, they’re able to succeed and allow you to get a head start on building your credit.
If you want to be financially responsible, you will need help. Budgeting and knowing what to spend on are not easy to decide on your own, and unfortunately, these are not taught in public school. A credit counselor can help guide you in the right direction in regards to your spending and give you the right tactics in order to avoid getting into debt.
Once you’re in debt, you know what it’s like to get harassing phone calls. The thing is, even if you change your phone numbers on a constant basis, creditors are sneaky and can find your new information with little effort on their part. If you want the phone calls and disturbing letters to stop, all you need is a credit counselor as your counselor can negotiate with creditors on your behalf. The negotiation process entails coming up with a realistic number you can pay them on a monthly basis in order to get them to leave you alone.
Maintaining a good credit score can be incredibly hard when you have no skills whatsoever in the field of financial management. When you have a good credit score, you are not only eligible to start your own business and rent an apartment, but you qualify for 0 percent interest rates.
Lastly, your credit counselor can help you bundle everything you owe each month into one large package. One manageable monthly number is all it takes for you to get back on your feet and pay your debt more responsibly. When you have more than one creditor knocking on your proverbial door trying to get money, it makes sense to deal with a credit counselor instead and have them represent you!
In theory, credit counseling is defined as the process of offering advice and practical suggestions about debt management to people who suffer or are about to suffer from bad credit. This process is actually a journey that may involved different stakeholders who will help an individual to get into a favorable financial position with the help of special debt management programs. Most of these programs are made lucrative to people suffering from bad credit in that they promise better debt repayment terms such as lower interest rates and reduced amounts.
After beginning a credit counseling program, the consumer’s accounts will be closed to all new charges. All due monthly installments can be brought together to form one wholesome cash amount that is much easier to pay back than dealing with so many small payments every now and then.
Possibly the most appealing aspect of a credit counseling program is the dramatic decrease in interest rates that the debtor may receive. With the help of several small repayment amounts, a debtor begin implementing the skills learnt from credit counseling. This will not help the debtor’s credit score, but it will provide him or her with an opportunity for a fresh start at building their credit.
Credit counseling agencies first appeared in the 1950s with the purpose of promoting financial literacy and preventing bankruptcy. The Association of Independent Consumer Credit Counseling Agencies was formed in 1993 and consisted of a group of credit counselors who provided their services over the phone. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made credit counseling mandatory in order to file for bankruptcy in the United States.
Credit counseling services have not been without their fair share of criticism; in fact, the Fair Trade Commission and the Better Business Bureau have received many complaints concerning hidden fees and inability to opt out of some payments that were considered voluntary. The IRS continues to audit and otherwise investigates credit counseling business and has revoked the tax-exempt status from some of the existing major companies. Many claim that these businesses favor the credit card companies over consumers although they claim they don’t take sides.
The issue of whether taking part in a credit counseling program will hurt a person’s credit is still open to debate and remains an issue of importance to most consumers. The truth is that while it should not harm a person’s credit score, record of their participation will stay on the person’s credit score and will deter them from receiving loans and lines of credit in the future.
When considering enrollment in a credit counseling program, the consumer should shop around the many different business that offer a debt management program and should contrast and compare the differences between them such as the fee structures and whether they are a for profit or non-profit agency as well as the different services provided by each one. They should also keep in mind that the service will stay on their credit report for 2 to 3 years.
A lot of people have loans. This does not mean that a lot of them are broke. It just means that the economy is healthy and is going to be stable. These loans are also good for credit history it adds points and allows a person to have some credibility when it comes to paying debts and responsibilities. There are times, however, that we would have to have several different loans especially in cases of emergency and unwanted events like sickness and other events. There is no problem with that, only the people who have to pay will have to process papers from several different debtors. They would also have to pay in the same manner which is very tiring.
Debt consolidation is the process in which you can put all your debts into one account. This can be done in two different ways. First, you can loan an amount that will pay all the loans that you have. What happens is that all you other loans will be cleared. The only loan left is the one you used to clear everything out. The good thing about this is that you can now renew the loans in all the other accounts. Second, you can apply for debt consolidation and the company will do the job for you.
The best thing about this process is the fact that you will be able to save so much time in paying all the loans. Commonly you would have to spend all day to pay the debts. You would also have some difficulty managing all the interests and the penalties because all of them have different rates. This is true even if you are using a credit card. On top of that, your credit history with all those other companies will be cleared so anytime you would need a large amount of money there would be very little hustle.