What is Credit Counseling?

Debt is something that affects a lot of people. The average debt being around $27,000 and it has been made clear that many people have found themselves paying high interest rates on thousands of dollars that is owed to personal loans, credit cards and much more. When only the minimum is paid, it can take decades to pay it off. Most people are in debt so deep that they cannot pay in full and if they do nothing then it can end up in bankruptcy.

If you are debt and fear that you will end up filing for bankruptcy, then consider enrolling in credit counseling. The right program can help you to get back on track with your finances and avoid options that can destroy your credit like bankruptcy or consumer proposal.

What Happens During Credit Counseling?

Credit counseling is a type of debt education and reduction program that was created to provide financial help to those who have debt. It is often offered by non-profit companies, but it is often a route that many might take when they can pay bills but are still struggling.

The whole process can be long based on how much debt you have, and how successful your counselor is when negotiating with the creditors. Using financial education and budgeting, negotiations with creditors, debt consolidation loans, and other strategies, credit counseling helps to get you out of debt and how to keep you from getting that far into debt again.

Credit counseling will give you:

  • Debt repayment plans that allow you to make a payment to your counselor, which then gets split up and sent to the creditors.
  • Assistance with debt consolidation loans to lower the average interest rates and monthly payments if right for your situation.
  • Help negotiating with creditors to get them to reverse or reduce late fees that are a large part of your debt.
  • Consultations with trained financial counselors on how to create a budget and keep with it.

Is Credit Counseling Right for You?

Even though credit counseling is perfect for many people, it is not always right for some. Credit counseling can help those who have a low debt to income ratio, but those who have high ratios will qualify for consumer proposal or bankruptcy, then this option is not right. A good thing to remember is that if it will take longer than 7 years to get out of debt, then consumer proposal or bankruptcy is going to be best. Those who are in credit counseling will not be able to get affordable credit while in the program, and if you want the program for longer than 7 years, one of the other options may be better because they will keep you from getting affordable credit for 7 years.

If consumer proposal or bankruptcy is not right for you and you don’t want to go with a long process of credit counseling, then you might want to think about debt settlement. A great program for debt settlement will have you out of debt in less than 3 years, so the quick results are best.

Furthermore, credit counseling is for those who owe under $10,000. Since credit counseling agencies don’t offer principal reduction services, they can work with what you pay creditors to provide assistance in lowering the interest rate and remove late charges and fees. If you owe under $10,000 then the amount of time that it will take to get you out of debt will be based on how much your debt is. If you owe over $10,000 then it might be best to save your money and then go with debt settlement.

For More Information

Picking a debt relief option can be a challenge and speaking to a professional can help. Fill out our debt relief form to learn more.

CREDIT COUNSELLING

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