Credit counseling agencies help people with money management, credit management, and budget building; they provide free educational materials and workshops, as well as some repayment options. Counselors at these organizations are trained and accredited in budgeting, debt management, and credit issues. Good credit counselors will spend a good amount of time explaining the nature of your financial situation before devising a solution suited to your specific money problems. The first counseling session lasts an hour or so, with intermittent options to meet again. Good credit counselors won’t ask for a huge upfront fee or guarantee to solve all your problems. Need a bankruptcy lawyer? Call now!
In a Hurry? Dial +18-503-850-342 Now!How Can I Find a Trustworthy Credit Counselor?
Most of the reputable credit counseling organizations are non-profit and charge very little in fees. They operate out of local offices as well as online or over the phone. Go to a credit counseling service that operates in your area. Non-profit credit counseling programs may be listed in the following sources:
- credit unions
- personal financial managers
- branches of the U.S. Cooperative Extension Service
Your local consumer protection agency or financial institution can also refer you to a credit counselor.
How Do I Check Out a Credit Counseling Agency?
An organization may be non-profit, but that doesn’t guarantee that it either charges reasonable fees or offers legitimate help. Some credit counseling agencies charge exorbitant fees that they may hide in the fine print.
You should receive free information about its services before you reveal anything about your financial situation to a credit counseling agency you feel is reputable. You can have the organizations you have on your shortlist investigated by your state Attorney General or local Consumer Protection Agency. Ask them if any complaints have been filed against that organization. Just because an organization has no complaints does not mean it is. Your state Attorney General will know if there are any licensing requirements and whether the company you are considering holds a license.
The U.S. Trustee Program maintains a list of credit counseling agencies approved for pre-bankruptcy counseling, but does not endorse any.
After confirming them through the research, interview with your final candidates. Choose an organization that:
- Does not require upfront fees for services that are not yet rendered.
- Credit counselors, certified or accredited by an outside organization.
- Provides a variety of services, including budget and credit counseling and debt management classes.
- Gives a written quote of any monthly or one-time fees.
- For others, budget constraints are binding.
Make sure you get everything in writing and that you read your contracts before signing them.
What Is a Debt Management Program?
A reputable credit counselor may offer you individualized advice on the organization of your finances, once it has screened your financial situation. Counselors may even recommend enrolling in debt management plans to repay “unsecured” debts that include credit cards, medical, and student loans. Debt management plans are ineffective with the “secured” type of debt that is collateralized by something of value, like a home and/or car.
If the credit adviser tells you that the DMP is your only choice and has not spent any time reviewing your finances, find a different credit counselor. Once you and your credit counselor agree that a debt management program is the appropriate remedy for your situation, all of your creditors should be contacted. You have to get a verification from all of your creditors that they offer the modifications and options described to you by your credit counselor.
A typical debt management plan works this way. Your counselor will agree with you and your creditors on a modified payment schedule. Your creditors might agree to reduced rates of interest or to write off some fees. You give deposits every month to the credit counseling organization. Your counselor on your chosen payment plan will then use your deposit to pay off your unsecured debts, such as credit cards, bills, and student loans.
In a Hurry? Dial +18-503-850-342 Now!What Is Debt Settlement?(Debt Negotiation)
Debt settlement differs from debt management plans. Debt settlement plans are offered by for-profit companies to individuals with overwhelming credit card debts. These companies negotiate with the creditors so that you can pay a lump sum, which is a fraction of the debt owed. The company, in turn, agrees that the money it offers will be used to pay off that debt. Besides this, you need to put money aside each month into a special account until the money you are able to accumulate is enough to cover any settlement you reach by agreement. These programs encourage you to halt your payments to your creditors every month.
There are perils that can be involved with debt settlement. If the company is unable to convince your creditors to settle the debts, you may find yourself accruing more money in interest and late fees. Even if the company manages to convince your creditors, you must also have the ability to pay for a lengthy period to settle your debts. Be aware of these unscrupulous companies that make promises they can’t keep, charge outrageous fees, and render little or no help. It is also possible that you won’t be able to come to a settlement of all your debts. This means that throughout your time in the program, you might continue to receive phone calls from those debt collectors. Your credit report and score will also likely be adversely affected. This process could take several years to accomplish.
Depending on the nature of your relationship with the debt relief company, you may be required to deposit funds into a special account that will be managed by an independent third party. You’re the owner of both the funds and the interest accrued in the account.
What Will Be the First Thing That a Debt Settlement Company Tells Me?
It’s possible even when you take the bait; there are a plethora of other things to be considered. It has to tell you about its terms and conditions before you agree to take its services.
- The fees, conditions, and terms of service.
- How long will it take to see results? For example, how many months or even years will it take before making an offer for settlement to each creditor?
- The program may require that you stop making payments to creditors, and this usually has bad consequences for you.
- How much money do you need to save in a special account before your company can make a creditor offer in your name?
You cannot pay the debt settlement company’s fees before your debt is settled. There are generally two types of fee agreements (a percentage of the debt amount resolved or a percentage of the amount saved). The debt settlement company may charge you only part of the full fee each time it successfully settles your debt with a creditor.
The debt settlement company must also inform:
- The money is yours and is entitled to be paid interest.
- The account manager is not rewarded with commissions and is independent of the debt settlement provider.
- You can withdraw your funds at your own convenience without being charged.
Summing Up!
Take charge today of your financial future with Bruner Wright’s trusted advice. Be it debt problems or management of your finances, or how to go about considering repayment options, our accredited credit counselors would be able to assist you. With one-on-one consultations, we will assist you in exploring your financial situation to tailor a solution around your needs, without any hidden fees or false promises.
Make sure that debt does not rob you of your life! Take a step toward constructing a more solid financial foundation today. Simply call Bruner Wright and book your first consultation!
In a Hurry? Dial +18-503-850-342 Now!
You can also find a wealth of resources on our website to explore your various options in considering filing for bankruptcy.
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