Benefits of Credit Counseling

You’re in debt up to your ears and the bill collectors keep calling, Credit counseling may be an option that can help you repay your debts and ease the stress of constant calls from debt collectors. Here are three types of assistance offered by credit counselors:

Review and adjust your budget

Credit counselors review your income and obligations to develop a cash-based budget. This helps you live within your income and determines if you can qualify for a debt management plan.

Establish a debt management plan

If you’re in debt and can’t get ahead due to high interest rates and fees, a debt management plan can help. After reviewing your finances, your credit counselor negotiates with your creditors to set up an affordable payment plan based on your budget. Interest rates may be reduced and fees waived. This allows more of your money to be paid toward balances owed than toward interest and fees. You can also benefit from debt consolidation, as you’ll make one payment to your credit counseling service, and it will pay your creditors according to the terms of your agreement.

Avoid bankruptcy

When debt becomes too much of a burden, bankruptcy may seem like the only solution. A bankruptcy appears on your credit history for up to ten years and can impact your ability to rent, get a job or establish new credit. A debt management plan through credit counseling can impact your credit while in process, but when it is completed, the debts included in your plan will be paid off.

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