If you are facing difficulty in paying off your credit bills and receiving harassing phone calls from your creditors, then, instead of losing heart and thinking of declaring yourself bankrupt, you can take help of a credit counseling service and get out of this situation.
Service rendered by a credit counselor
If you enroll yourself in a credit counseling service, the representative of the company will help you to select a debt repayment option that will be according to your affordability. He will also guide you to prepare a financial budget and educate you how to handle your debts in the future. He will negotiate with your creditors, on your behalf, and work out a repayment plan for you. He can also negotiate with your creditors to waive off late payments and over limit charges.
Types of debts covered in this service
The credit counseling services generally will help you to pay off unsecured debts. You will get help for your unpaid credit bills, attorney, dental, medical bills, unsecured bank loans, IRS tax debt, unpaid utility bills (cable, telephone, water), unpaid rent, etc. It does not help you with secured debts like, mortgage and auto loans. You will also not get any help to pay for criminal fines, child support, etc.
The right time to go for credit counseling
You can go for credit counseling, if you face the situations mentioned below:
You are having difficulty in making payments and have missed more than 3 installments
If you are on the verge of declaring yourself bankrupt
If you are apprehending credit crunch in the near future
Factors considered in credit counseling
The factors that are taken into account in a credit counseling session are as follows:
Your monthly income and expenses
The total amount of outstanding balance
The current number of debt accounts
Interest rates for the various debt accounts
Account which has the minimum debt balance
Other expenses like tax, medical bills, insurance, etc.
Benefits of a credit counseling service
The advantages of a credit counseling service are:
1.Helps in preparing a budget: The representative of the credit counseling service will help you to prepare a financial budget, based on your monthly income and expenses and will educate you how to save extra money and handle your debts faster.
2.Re-rating of delinquent accounts: Prior to opting for a credit counseling service, if you have already been delinquent, you can apply for re-rating of your delinquent accounts, after you have made several payments.
3.No harassing calls: Once you opt for a credit counseling service, your creditors will stop making harassing calls to you.
You need to keep in mind that, you will have a negative effect on your credit report, once you opt for a credit counseling service. You should shop around and find a reliable credit counseling agency, so that, you can pay off your debts faster and lead a financially free life.