In an ideal world we would all be able to handle our expenses with no help from anyone. We would only have the amount of debt that we could easily pay back. Unfortunately, we do not live in an ideal world and when the unexpected happens sometimes we end up in over our heads financially.
Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.
What can Credit Counselors Do?
A credit counselor will review the debtor's situation and propose a payment plan that is reasonable for debtor and acceptable for the creditor. The debtor pays a monthly payment to the agency and the creditors receive their agreed upon amounts from the agency.
Put the Experts to Work for You
Debt consolidation agencies can sometimes get your interest rates lowered, stop late fees and penalties from mounting and come up with a repayment plan that will work with your budget.
Not Always a Win Win Situation
One problem with credit counseling is that it sometimes does not result in a monthly payment that the client can afford. Creditors are only willing to negotiate so far, and if you owe a lot of money you may not be able to afford the best deal they will give you. If that is the case, you'll have to either find another means of paying your debt or consider bankruptcy.
Another thing about credit counseling is that it isn't free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don't, they have to get the money to pay their employees somewhere. That "somewhere" is usually from your debtors, as a percentage of your payment.
There is some debate as to how going through credit counseling affects your credit. It is noted on your credit report. In most cases, you can't get new credit until you complete the program. But it could also affect you after your debts are paid off. Many lenders consider credit counseling as being similar to Chapter 13 bankruptcy.
Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.
What can Credit Counselors Do?
A credit counselor will review the debtor's situation and propose a payment plan that is reasonable for debtor and acceptable for the creditor. The debtor pays a monthly payment to the agency and the creditors receive their agreed upon amounts from the agency.
Put the Experts to Work for You
Debt consolidation agencies can sometimes get your interest rates lowered, stop late fees and penalties from mounting and come up with a repayment plan that will work with your budget.
Not Always a Win Win Situation
One problem with credit counseling is that it sometimes does not result in a monthly payment that the client can afford. Creditors are only willing to negotiate so far, and if you owe a lot of money you may not be able to afford the best deal they will give you. If that is the case, you'll have to either find another means of paying your debt or consider bankruptcy.
Another thing about credit counseling is that it isn't free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don't, they have to get the money to pay their employees somewhere. That "somewhere" is usually from your debtors, as a percentage of your payment.
There is some debate as to how going through credit counseling affects your credit. It is noted on your credit report. In most cases, you can't get new credit until you complete the program. But it could also affect you after your debts are paid off. Many lenders consider credit counseling as being similar to Chapter 13 bankruptcy.
About the Author:
Tire of barely keeping up with your credit card debt? Get some simple methods of how to pay off credit cards faster on the Debtopedia website. Visit http://www.debtopedia.com for a free copy of my "Secrets Of Credit Card Debt" report.
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