Consumer Credit Counselling – What is it? Many
of us have heard the about it lots of times and seen the ads on the internet,
but may not understand what it means. It can sound confusing, but it does not
have to be.
Put simply, it is is professional advice, with the ultimate goal of helping you, the consumer, understand your finances and assess your debt situation. Many credit counselors can do the following:
1. Analyze your financial situation in detail, including credit card debt, student loans, etc.
2. Help you develop a payment plan for your debt, based on your income.
3. Help you to negotiate a lower interest rate with your creditors—the people or organizations you owe money to.
Usually, the agency you are working with will establish a Debt
Management Plan. With this plan, you will often make one monthly payment to the
Agency. They will then pay your payments to the creditors. You are
typically unable to charge any more on your accounts while you are involved in
the Debt Management Plan.
The benefits of a
counseling agency are as follows:
1. They can help you avoid bankruptcy.
2. It is convenient, and ensures your payments are made on time to your creditors.
3. They can reduce your interest rates, from 20-50%.
4. They can consolidate all your debt payments into one monthly bill.
When shopping for an agency, remember you should not have to pay a fee just to
find out about the company and what they offer. Also, look for a counseling
agency that is a member of either the NFCC (National Foundation For Credit
Counseling) or the AADMO (American Association of Debt Management Organizations).
Stay away from any company that will not give you a straight answer about what they charge or what they can do for you.