The best way to handle any debt is to be able to pay it off without any help. Sometimes that just can't happen. Making minimum payments can sometimes be a challenge if your situation changes.
Consolidating debt is an option for people who can't make payments. You could do this alone by putting all you debt on a low interest credit card or get a home equity loan. There are also credit counseling services available as an option.
How Does Credit Counseling Work?
Credit counseling consists of negotiating with a client's creditors for lower interest and/or lower payments. Late and over-the-limit fees are often waived as well. Then the client sends the credit counseling agency one payment each month, and the agency distributes the money to creditors as agreed upon.
The pros
A credit card counselor can usually negotiate a lower rate or payment if you can't. You will be able to pay off your debt faster with the money you save. You can also plan a budget to repay your debt and also still have some money left for other things if the counselor helps you.
The cons
Sometime the monthly payment may be too high for the client to pay. Creditors will only negotiate so much and sometimes the deal they offer may still be too much to handle. If this happens you may have to find an alternative plan to repay your debt or consider bankruptcy.
Credit counseling services charge fees that are added to your monthly amount. If they don't do this they will usually obtain the money from your debtors as a part of your payment.
It's still not sure as to how your credit is affected by going through credit counseling. Usually you will have to finish the program to get new credit but it could still affect you as many people who lend you money think of credit counseling to be like Chapter 13 bankruptcy.
And finally, it is imperative to check out any credit counseling agency that you are considering. Just like any other business, there are some that are not trustworthy. The Better Business Bureau is a good source of information on credit counseling agencies.
It's important to weigh the pros and cons of credit counseling. You may not need to involve another party if you just take the time to work with your creditors first.
Consolidating debt is an option for people who can't make payments. You could do this alone by putting all you debt on a low interest credit card or get a home equity loan. There are also credit counseling services available as an option.
How Does Credit Counseling Work?
Credit counseling consists of negotiating with a client's creditors for lower interest and/or lower payments. Late and over-the-limit fees are often waived as well. Then the client sends the credit counseling agency one payment each month, and the agency distributes the money to creditors as agreed upon.
The pros
A credit card counselor can usually negotiate a lower rate or payment if you can't. You will be able to pay off your debt faster with the money you save. You can also plan a budget to repay your debt and also still have some money left for other things if the counselor helps you.
The cons
Sometime the monthly payment may be too high for the client to pay. Creditors will only negotiate so much and sometimes the deal they offer may still be too much to handle. If this happens you may have to find an alternative plan to repay your debt or consider bankruptcy.
Credit counseling services charge fees that are added to your monthly amount. If they don't do this they will usually obtain the money from your debtors as a part of your payment.
It's still not sure as to how your credit is affected by going through credit counseling. Usually you will have to finish the program to get new credit but it could still affect you as many people who lend you money think of credit counseling to be like Chapter 13 bankruptcy.
And finally, it is imperative to check out any credit counseling agency that you are considering. Just like any other business, there are some that are not trustworthy. The Better Business Bureau is a good source of information on credit counseling agencies.
It's important to weigh the pros and cons of credit counseling. You may not need to involve another party if you just take the time to work with your creditors first.
About the Author:
Bankruptcy should be your last resort. Have you looked into debt consolidation and other ways of reducing your credit card debt or other forms of credit? Visit Debtopedia at http://www.debtopedia.com for more helpful tips
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