Credit counseling services, an alternative to bankruptcy, are highly beneficial for people with excessive debt. Today, the demand for credit counseling services is very high because of the increasing requirements for filing bankruptcy. If you are seeking relief from your financial obligations, you can depend on credit counselors. Filing for bankruptcy is a burdensome task. The credit counselors will provide you the best possible options on the basis of your financial situation. You will also get very good assistance from them to evaluate all your financial obligations. Besides bankruptcy, they are also able to discuss various options available for you. If you are skeptical of filing for bankruptcy, you will get proper guidance from the credit counselors.
Credit counseling services are also helpful for developing a plan for you to pay off your unsecured debt like credit card debt. Usually, secured and some other types of debts like student and child support loans are not coming under the service of credit counselors. Therefore, you must continue the payment of your mortgage as per your loan agreement.
Ways to Choose the Right Credit Counseling Services
You must be very careful while selecting a credit counseling agency (for a quality example, check out this agency). Due to the increasing demand for credit counseling services, a number of agencies are working in this field to sell their services. Such agencies may not have real interest to reduce your debt. Instead, they will focus only on the sale of their services.
You will get low-cost or free credit counseling services from local agencies, housing authorities, military bases, credit unions, universities, etc. However, the non-profit agencies you are going to select have proper accreditation to offer these services.
You must also be aware of the service you really need. Some agencies may try to sell a DMP (Debt Management Plan) even if you do not need it. The counseling must include budget analysis, credit report review and proper assistance.
The counselor must be able to ask the right questions to get in-depth information regarding your financial situation. If their questions are not proper, they cannot suggest you a good option to get you back on the right track.
Some agencies may offer you debt settlement services, but you must keep away from them. These people often behave as credit counseling agencies in order to get confidence from the public. You will not get proper financial education from these agencies. Their fee will be very high and they allow the debts of their clients to become delinquent. They will also charge before reaching a settlement. This will cause serious damage to your credit and it will also invite future legal proceedings.
Credit counseling services are not suitable for everyone. You can seek counseling if you are not able to make a little more than your minimum payment per month. It is also suitable if your
credit limit is near or over or if you receive collection calls constantly.
You must be prepared to face some very tough questions if you are going to seek the credit counseling services. Your monthly income and expenses will be a major topic of discussion. You must provide honest and open answers about your financial situation. In order to establish an effective budget for you, the counselors need a complete understanding regarding your finances.