How Credit Counseling Can

How Credit Counseling Can

Save You From Bankruptcy

If you find yourself facing more debt than you can manage on your

own, you might want to consider getting the assistance of a credit

counseling agency. Because these agencies handle some of your

most sensitive personal information, you'll want to be sure that

you're dealing with an efficient and reputable organization before

you get started with them. After locating several credit counseling

agencies through the Yellow Pages or via the Internet, you can

assess their reputation by checking with your local Better

Business Bureau. Some credit counseling agencies are strictly

non-profit and offer their services for free to those they deem in

need of assistance. Others charge certain fees, ranging from an

up-front deposit to a final bill that is based on the time that was

spent consolidating your debts.

You'll want to find out right away if you will eventually be

charged for the services that they provide because if you are in

debt, the last thing you need at this point is another bill. Once

you've determined if you'll be able to work with the agency, you

can start repairing your credit rating by letting the agency

consolidate your debt.

Credit counseling agencies can help you draft a debt repayment

plan, outlining what needs to be done in order to clear all of your

outstanding balances. They calculate your income, along with any

unforeseen financial setbacks (such as medical expenses) are

also taken into account when making up this plan.

Whatever is left of your debts are then converted into one lump

sum, which you can then start to repay in monthly installments. In

some cases, an agency might buy the debt from your creditors,

meaning you make your monthly payments directly to the agency.

In other cases, the agency might intervene on your behalf, and

convince your creditors to extend grace periods, temporarily

suspend collection, or accept a reduced lump sum.

Credit counselors can help you get out of debt, but they cannot

totally erase any past damage to your credit report. Although past

bad credit can remain on your report for several years, working

with a credit counseling agency can still help you get approved

for credit at some point in the future as it shows that you put in a

lot of effort. Through a credit counseling agency, you will be able

to make consistent payments against your outstanding balance,

which does reflect positively on your credit report, and can be

influential if you apply for credit in the future.