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What Is Credit Counseling


What Is Credit Counseling?

Credit counseling is an effective way to get out from under a mountain of
debt. There are two types of debt counseling firms, one is a profit
making company and the other is a not for profit organization. Both
offer the same services, which are advice to creditors and options to
resolve pressing credit situations. The options that they propose may
range from making informal arrangements with creditors to debt
consolidation to recommendations of declaring bankruptcy. All of these
suggestions will be based on the individual case and the depth of the
debt problems.

The major differences between for profit and not for profit debt
counseling services are in the fees they charge, the range of services
they provide in-house, and the experience of their staff. Generally
speaking not for profit organizations are cheaper but for profit
companies tend to have more qualified staff. The end product will likely
be very close regardless of which type of organization you choose. The
important thing in debt counseling is to be honest and provide all of the
necessary information at the very beginning of the process. There are no
secrets in the credit industry and if you have changed addresses or even
names your credit history is likely to follow you. By being upfront with
your debt counselor they can more quickly bring you closer to a
resolution of your credit and debt problems.

After your initial interview with your credit counselor they will prepare
a report for you that outlines your current credit rating, which is your
ability to borrow and under what conditions and interest rates, and
starts the process of laying out options for you to consider. If it is
still possible for you to get additional credit, or negotiate a debt
consolidation loan from a bank or other lending institution, then they
will help you arrange that. More likely than not the recommendation will
be bankruptcy protection or formal debt consolidation. If you have
absolutely no ability to repay the monies owed in either the short term
or over a long period of time then personal bankruptcy may be your only
option. In that case the debt counselor will help you get organized for
that process.

But most people want to repay their debts and just need a little more
time to do that. Debt consolidation can help make that happen and it
involves a negotiation process with your creditors so that they will
accept something less than full payment in order to relieve you of your
debt to them. Your debt counselor will look after all of that for you
and after a period of months of years you will once again enjoy a
positive credit rating.

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