When it comes to choosing among different debt options, some consumers find that following an expert’s financial advice is all it takes to help them get out of debt. The reason behind this is that many people feel trapped in their dire situation mainly because of not having anyone to ask what to do. As a result, credit counseling has proven to work for some consumers that, if not assisted by an expert, wouldn’t be able to recover.
Learn the basics of this financial option, its main pros and cons, and evaluate if it might be the best approach to rescue your finances.
Credit Counseling In 6 Easy Steps
A Credit Counseling Agency can help you design a repayment plan that meets your budget and fulfills your expectations. The six major stages of this approach include:
- You collect your financial paperwork
- You send your paperwork to a Credit Counseling Agency
- The Agency evaluates your finances
- A Counselor creates a new repayment plan that meets your budget
- The Counselor then sends this plan to your creditors
- Once the creditors approve of this plan, you may begin making your payments to the Agency under the new repayment plan
Advantages And Disadvantages of Credit Counseling
- Pay your debt under a new plan you can afford
- An alternative to filing bankruptcy
- Instead of spending your time and energy negotiating with creditors, the Agency takes over and does this for you
- Paying off your debt through credit counseling tends to take longer than through other debt options
- Some lenders consider it as negatively as going bankrupt and, thus, could deny you new loans
- Some Agencies’ service fees are high
Is It The Right Financial Option For You?
It depends on your specific needs, budget, and financial situation. If, for instance, you’re looking for an expert to help you figure out a way to meet your obligations through a new repayment plan, perhaps credit counseling could be your way out of debt. If you want more than that, such as an expert to negotiate your debt for less money than what you owe, including interest rates and other fees, maybe debt settlement will meet your expectations.
Whatever option you decide to go with, remember that your finances are a very delicate matter. Before making any decision, keep researching, talk to a professional, and evaluate which debt option is the most appropriate for your case.