Debt Help With Credit Counseling

For consumers who find them selves owing money to a number of creditors without a sense of how they will pay off their debts, credit counseling has been a popular choice for professional credit card debt help as an alternative to debt settlement. At first glance, it may appear to be a more appealing debt relief option, with face- to- face counseling sessions and the promise of lower monthly payments. However, if you are in a situation where you have come to realize professional debt relief may be necessary, consider these factors before determining that credit counseling is the best path to rid yourself of the credit card debt that you owe. In 2000, the Better Business Bureau (BBB) had only 404 registered complaints with all credit counseling companies combined. At the time, these companies were majorly non-profit debt help organizations and genuinely inclined to provide a human service. What about five years later? In 2005, the BBB had 1286 registered complaints with credit counseling companies, roughly 190 per year over five years. Outside of these statistics, let’s take a look at what the majority of credit counseling companies promise and why it is evident that it may not your best debt relief option to achieve financial freedom. Credit counseling companies first engage in sit down conferences with their clients in order to set up a budget in which their client is supposed to abide by. While that sounds like a an appealing system to establish a well rounded budget with the help of an agent, setting up a financial plan is something any well able adult can do on their own without paying fees. In addition, the goal of credit counseling agencies is to reduce your interest rates in order to lower your monthly payments. How do they do that you ask? Well, they simply call your creditors and ask them to lower the interest. Once again, anyone can make a call to their creditors and request lower interest rates. In fact, if there is any evidence of a genuine hardship whatsoever they you can provide your creditors with, it is nearly guaranteed that the creditor will lower your interest rates. The credit counseling companies also ask that you make your payment to them each month in the form of a lump sum that includes their fees. They disperse this payment to all of your creditors to pay off your monthly debts. However, after they remove their fees from your lump sum payment, often times there are not enough money left over to pay off your remaining owed creditors. The result? Your interest rates get boosted back up on those accounts in addition to the late charges that will be assessed to your balances. This may sound redundant, but if you manage your money well and keep a tight budget, you can make a lump sum payment to your creditors at the end of the month without having to pay any fees to a credit counseling organization.

So, are there any reputable credit counseling companies out there? Of course there are, just make sure you do your research before you make a preemptive judgment about a particular company. One thing you can do is look online and make sure the company is a member of either (or both) the National Foundation of Credit Counseling (NFCC) or the Consumer Credit Counseling Agencies (CCCA). This will at the very least demonstrate that the company is practicing business in an ethical manner and with no fraudulent motives. In addition, keep a good eye out for what they are charging- anything less than 20 dollars per month for service fees is very reasonable, anything over that amount is typically not worth your dollar.