In recent years, more and more people who consider themselves financially responsible have fallen into what seems like unmanageable debt. Whether debts are caused by long spells of unemployment, health problems, education costs or something else, they can quickly spiral out of control. In addition to the financial worry, many people also grapple with shame and fear around their debts, and that sometimes prevents them from dealing with the problem.
To make matters worse, there are a number of shady enterprises that use misleading language to make it sound as though they are going to help debtors, but what they will really do is ruin the debtors’ credit rating and sometimes leave them in an even worse position financially. Bankruptcy can start to seem like the only solution. Debtors have another option, however, and that is a debt consolidation non profit service.
How Debt Consolidation Works
A debt consolidation non profit service should not be confused with either a debt consolidation loan or debt settlement program. A debt consolidation program will negotiate with the debtor and the creditors to agree upon a payment plan the debtor can handle.
Preparing for an Appointment
A person who chooses to work with a debt consolidation program will begin with an appointment with a credit counselor. Prior to the appointment, the debtor should make a detailed budget. The credit counselor will require information on money spent for everything from rent to groceries to incidentals. Using the budget information given, the credit counselor will determine the debtor’s eligibility for the program and will also provide further budget counseling or referrals if needed.
The debtor can visit a debt consolidation company in person or can conduct the initial counseling session over the phone.
Setting Up and Completing the Program
The debtor will then be entered into a debt consolidation program in which an agreed-upon sum is paid to the organization and then distributed among creditors. In this way, debtors can repay debts in a matter of months or just a few years and restore their credit.
Even the person who was prudent in setting aside an emergency fund may find it difficult to tackle multiple costly emergencies at the same time. A person who is having difficulties managing their debt due to unexpected expenses or other extenuating circumstances beyond their control may find that credit counseling is one of the best ways to address this problem. Credit counseling services are changing the lives of many people in several ways:
Peace of Mind
You can achieve peace of mind with debt relief.
One of the immediate changes a person sees when they start to seek debt relief is peace of mind. The person no longer has to worry about the repercussions for not doing anything to resolve the accumulating debt. Once enrolled in a program, all accounts can be brought current and the person can instantly begin to build their credit.
Money Management and Personal Finance Coaching
One of the pivotal moments in the person’s journey to financial freedom is the accomplishment of making it to the financial stages of the repayment plan. As the person receives counseling, they can begin laying the foundation for a secure financial future for their family. The coaching empowers the person to evaluate their financial decisions and learn how to rebuild credit. Learning the basics of personal finance through coaching is a service that most clients benefit from when they receive credit counseling. Some counselors even offer debt consolidation services that simplify payments and arrange favorable terms for their clients.
Debt Relief with Fewer Risks
The best credit counseling service offers a low risk way for a person to pay off any unsecured debts. Other forms of debt relief come with risks. Some forms of debt relief can put at risk of losing personal assets or being sued because of the loan. In program that includes a consolidation loan, a person can be assessed interest rates as high as 20 percent. The person can require even more time to pay off the debt. Bankruptcy makes rebuilding one’s credit much harder.
Entering a new chapter of financial freedom is an exciting moment. When the person feels as though they are in complete control of their financial situation, they are able to build a new life. Clients can enjoy financial freedom and peace of mind with the right counseling and education.
Being able to consolidate credit card debt is a great way to lower a consumer’s paperwork hassles and save money on interest charges. When credit card debt is consolidated, a consumer takes several different credit cards with varying interest rates and payment terms and combines them into one. This is usually done by paying off the balances on each card with a single payment every month.
When consumers consolidate credit card debt, they first thing that they notice is that the amount of paperwork they have to deal with on a monthly basis is greatly reduced. With only one payment to make instead of dozens, the odds of a person missing one of their credit card payments go down dramatically – a lot can happen if you miss a credit card payment. This makes budgeting for credit card payments a lot easier. Instead of constantly tracking how much is owed on each card, all a consumer has to do is make a single payment every month.
The credit counselors who manage a consumer’s credit card debt consolidation are able to distribute the payment among the consumer’s different creditors. In addition, these professionals are able to negotiate with credit card companies for the consumer. Because they have had years of experience in the field, as well as good relationships with the credit card companies, they are often able to get consumers better interest rates and payment terms than they could otherwise obtain on their own.
Going through the process of credit card consolidation is fairly simple, and the results are great. Furthermore, it is possible to pay less each month while making more progress on the debt than a person would have done otherwise. Because a trained professional is handling the consolidation, it is possible to pay more on the principal of the loan, eventually eliminating the debt, than just making payments on the interest each month.
Every person will encounter financial challenges from time to time. This means that individuals are often put in a situation where they feel the pressure to make a quick financial decision regarding their debt. Many car owners have found themselves in such a situation. When faced with the choice of whether or not to transfer the total balance of the car loan to a new credit card, what is the best choice to make?
Sometimes the person transfers the total amount of the auto loan to the new credit card. The person must then pay the minimum amount owed each month in order to avoid penalties on the new card. The person also has to work to make sure that the entire car loan is paid off completely within a certain amount of time to avoid double-digit penalties, fees and interest and do so without falling behind on any other financial obligations.
The best approach is to simply consolidate any credit card and auto loan debt into a debt counseling program. The credit card debt relief program gives the person latitude and flexibility that would otherwise not be available under the credit card transfer scenario. The person doesn’t have to worry about the pressures of catching up with the past due amount on the new card and doubling up on subsequent payments to satisfy the minimum balance requirement. He or she doesn’t have to plan for a sudden rate increase after becoming acclimated to paying a certain amount as one would in the auto loan credit card transfer scenario when the introductory rate ends. The individual doesn’t have to shuffle between credit cards to keep up with the minimum balance requirements for the new credit card. The person simply works through a comfortable payment schedule without worrying about fees or penalties until the car and other debts are paid off.
Some people are able to handle the auto loan transfer balance with no problem if there aren’t any student loans, mortgages, outstanding medical bills or other debt obligations to manage. Most people, however, would be in a better personal finance situation if they entered a credit card debt relief program. In these programs, the person gets the advantage of having maximum flexibility in repaying the debts and access to personal finance coaching if desired.
Sadly, it’s become commonplace for many Americans to find themselves deep in debt. Help, however, is out there. Debt counseling services are available to help people who feel overwhelmed by their own inability to pay bills. Such institutions assist debtors by teaching them to manage money, consolidating debts and reducing outstanding balances. If you feel like you’re drowning in debt, try not to panic – there’s still hope for your financial future.
The first thing a debt counseling agency will look at is your finances. Counselors are specially trained to help you make a well-informed plan concerning your finances. By creating a sort of blueprint for your income and expenses, you will gain a better understanding of money management and the means to wield it for yourself.
Next consolidators can contact your creditors and arrange new payments and debt levels that benefit everyone. They’ll roll all of you monthly obligations into one reasonable payment, and take care of distributing it to creditors for you. By allowing an agency to organize your debt in this fashion, you will only have to make one monthly payment for all your debts, which you pay to the agency. This new plan offers relief in more ways than one; in addition to less debt and the convenience of a single monthly payment, you won’t have to endure any more phone calls from creditors.
Another fantastic offering debt counselors provide is information. Credit education may not sound like much fun, but if you’ve gotten yourself in deep trouble, information will empower you as you fight your way back to the surface. Once you understand how to properly relate your income to your expenses, you’ll be able to get out of debt and maintain your freedom.
Financial education is so valuable that even those who don’t require extensive help from a counselor will certainly benefit from it. Often these institutions offer courses in debt management or budgeting that anyone can take without having to jump through the usual counseling hoops.
Credit counseling puts the power back in your hands, no matter how much debt you have accrued. It may take a few years, but during that time you’ll be able to establish peace of mind, thanks to your new power over your finances.