Consumer credit counseling is an alternative to filing bankruptcy. It is professional counseling that provides you with financial education and card counseling credit debt according to your situation.
Once you consult with a credit counselor, the counselor will assess your debt level and work out a payment plan based on your creditor’s guidelines. Credit counselors do not negotiate lower interest rates, but adhere to card counseling credit debt dictated by the credit card companies including the debt management plan payments with your creditors.
How Credit Counseling Works The credit counselor analyzes your credit situation including number of accounts, balance, minimum payment, balance due, and any past due account. The counselor then considers your monthly income and bills. Using this information, the counselor puts together a debt management plan (DMP) for paying off your debts. The proposed plan is sent to each of your creditors for approval.
Once your creditors agree to the DMP proposed by your counselor, you begin making payments to the credit counseling agency. The credit counselor disburses payment to each of your creditors in accordance with the DMP. In most cases, your credit accounts are closed to future charges as long as you are on the Debt Management Plan.
Costs A lot of credit counseling agencies claim to be non-profit. Even if the credit counseling agency says it’s non-profit, that doesn’t mean the services provided to you are free. In many cases there’s some kind of fee involved. Some agencies use your first payment to cover their fees, while others deduct a flat amount from your monthly payment.
You should never pay a fee just to obtain information about the company and card counseling credit debt services offered.
Do You Need It? A consumer credit counseling agency doesn’t have any rights or privileges that you don’t also have. Anything a credit counselor can do for you, you can do for yourself. Even so, there are many people who enjoy the convenience of the services provided by credit counselors.
If you don’t think you will be disciplined enough to distribute payment to your creditors each month, it’s usually better to work with a credit counselor. That way, you are responsible for making one monthly payment to cover your credit card bills. The credit counselor does the rest.
Disclaimer Legal Information Is Not Legal Advice This site provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
Consumer Credit Counseling Information, Debt Management Plan Information, Debt Settlement Plan information, Credit Counseling, Credit Score, Consumer Credit Counseling Service, CCCS, Bill Consolidation, Credit Repair, and Debt Consolidation is not advice, and we recommend you consult a licensed credit counseling agency, debt settlement attorney, and/or licensed debt management plan administrator in your state if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
