Credit Counseling – A Viable Solution for Anyone with Money Problems
If you have ever considered credit counseling, it may be in your best interest to contact an agency. Credit counselors assist consumers by providing them intelligent advice for managing their money and showing them how to create a workable, customized budget. People who follow these guidelines learn out to get out and stay out of debt and manage their money with more finesse.
Signs that You Need the Services of a Credit Counseling Agency
Naturally, each person’s financial situation is different. Still, certain indicators do suggest that you may benefit from seeking professional financial advice. If your debt problems seem to be insurmountable, then you may be experiencing one or more of the following situations:
- –You regularly live from one paycheck to the next, and have no money left for savings. Therefore, you don’t have a retirement fund or emergency savings on which you can depend.
- –You are using your credit cards to make the payments on other credit cards. Plus, you only make the minimum payment that is required each month.
- –Your monetary difficulties, or how you spend your money, is affecting the other areas of your life.
- –You routinely pay for everyday living costs, such as gas or food, with credit instead of cash.
- –You would not know how to cover an unanticipated financial emergency. For example, even if you took out a payday loan, you would have a difficult time paying the financing back.
Seek Counseling if You are Experiencing Anxiety about Your Bills
If you suffer from insomnia, eat too little or too much, then it is probably due to financial anxiety. Anyone who feels overwhelmed about their financial situation should seek credit counseling. Make an appointment before you are faced with bankruptcy.
Bankruptcy – Better for People Who Meet with an Expense that Was Beyond their Control
Bankruptcy is better advised for people who fall financially behind because of an expense that was completely out of their control. Usually, by filing bankruptcy, they can get back on track financially as they generally are used to budgeting their money.
Formulating a Plan
On the other hand, credit counseling is advised for people who just need to learn how to control their finances. Therefore, this kind of counseling is a practical and educational step. The credit counselor assists consumers by showing them how to better manage debt and formulate a a budget plan, often referred to as a DMP (debt management program). This type of plan enables the debtor to consolidate his credit card debt and other unsecured expenses.
The Advantages Associated with Credit Counseling
While a credit counselor may not be able to reduce an outstanding balance, he often can assist in removing any late fees or negotiating a lower interest rate for each credit card payment. Signing up for credit counseling eliminates collection calls too.
Credit Counseling – A Negative Mark on Your Credit Report but Not on Your Financial Health Overall
In the majority of cases, the credit counselor will negotiate with your creditors to remove late fees or penalties, and lower the interest rate of the outstanding debt. Unfortunately, DMPs will linger on your credit history as well as any accounts that are closed when negotiations are made. While this will negatively affect your credit score, the debt relief you obtain and the counseling you receive will make your financial life better overall.
One Easy Payment
If you opt to enroll in a debt management program or DMP, you usually will make one payment for all of the credit card debt that was negotiated by your counselor. Doing so eases up the strain of paying down so many credit card bills and makes it easier for you to see where you stand from a budgetary point of view.
The Credit Counselor: How Does He Represent the Program?
If you want to go ahead with credit counseling then, you also need to look for certain qualities from the counselor himself.
Communicating with a Counselor
For example, the counselor should be able to supply you with solid advice on money management. Otherwise, you will always be in debt. In addition, the counselor should inform you, upfront, about any fees that are charged. After all, the idea of seeking counseling is to lessen the amount of your debt – not add to it.
What Services are Offered
When you meet with a counselor, he should outline the specific services that are offered by his company. Don’t work with an agency that only provides DMPs as a solution to budgetary difficulties, or only charge fees to pay off creditors. They should be able to provide advice on budget preparation or feature programs that help participants improve their money management skills.
The Path to Financial Freedom Starts Here
If you want to learn the secrets to setting yourself free financially, then obtaining credit counseling is a positive step in the right direction. As long as the company is more devoted to lowering your debt versus charging you for their services, you’ll be happy with the results.