According to a survey, millions of people need help to manage their personal loan, debt, bankruptcy process, and other financial issues. They all need help to remove financial crisis from their life. But the million dollar question is, to whom can they trust? And what is the remedy to overcome the problem? The first thing that you should do is to opt for credit counseling. This is a process that provides you with financial assistancewhile involving you and educating you about finance, debt repayment process, etc. Credit counseling is not only about debt repayment, but also about how you can handle your finances in the right way so that you don't fall into the debt problem again. Find out why you should go for credit counseling and how it can help you.
Why should you opt for credit counseling?
Following are some reasons for which you should go for credit counseling:
- Most of the good credit counseling services are free of cost or charge nominal fees.
- You can get the counseling in person or over the phone as well.
- Even if you’ve no debts, then they can offer you a customized budget, which is suitable for your income. You can get money saving ideas and financial knowledge as well.
- A home buyer are those who’re looking for a reverse mortgage can get the counseling as well.
- The credit counselor can manage your financial obligations.
- They can make an assessment of your present financial status by calculating your total monthly income, your expenses, and the amount you can spend towards paying off your debts.
- They’ve experience in dealing with creditors. So, they can negotiate with the creditors better than you.
- A credit counselor can even make the creditors eliminate the late feescharged on the accounts.
- They can negotiate with your creditors and re-age your accounts. Once your debts are paid in full, your credit report will be updated accordingly.
Services provided by the credit counseling agencies
Some of the services that are provided by the credit counseling agencies are as follows:
1. Providing financial assessments
When you fall into a lot of debts and seek the help of a credit counseling agency, then the first step that you’ve to go through is an assessment of your finances. Counselors, who are professionally trained and certified, will be making an assessment of your finances. They’ll provide you with a detailed analysis of all your assets as well as your income and expenditure.
2. Avoiding bankruptcy
Credit counseling also helps you to avoid bankruptcy. Though according to the bankruptcy code you need to get counseling from a legitimate agency before the filing, which is called pre-bankruptcy counseling. But, in some cases, if bankruptcy is the last option, then most of the credit counseling agencies will help you through the whole bankruptcy process. Even they can refer you to an efficient attorney for the best help.
3. Creating a debt repayment plan
Credit counselors can help you by offering you a debt management plan, enrolling in which you can repay your debts systematically. They'll negotiate with the creditors to reduce the interest rates. If the credit counseling agency helps you to get a debt repayment plan, then it’ll be reported to the credit bureaus accordingly. This’ll not affect your credit score negatively.
4. Giving financial education
Credit counseling helps you to know the ways to handle your finances in a better way. Credit counseling will help you understand the need to spend less if you're spending a lot. You may also be given some useful guidance that’ll help you in handling your money smartly. Thus, credit counseling educates you regarding the ways in which you can have a healthy financial life.
5. Formulating a budget
One of the most important tasks that the credit counseling agency would do is to create a budget for you. And only a realistic budget will help you to understand if your expenses are more than your income. In case your net income or the amount left after you subtract your total expenditure from your total income, is a negative quantity or very low to pay off debts, then they would determine how to cut down on your expenses. This is to be done so that you can save more and that can be used to pay off your financial obligation. With a proper budget, it becomes much easier to point out the problem areas and work accordingly.
Read more: Budgeting - In what way you can meet one-off expenses
Final words
National Foundation for Credit Counseling (www.NFCC.org or 800-388-2227) and the Financial Counseling Association of America (www.FCAA.org or 866-694-7253) are renowned as the major reliable credit counseling agencies.
Try to avoid some eye catchy late night TV ads, which claim to clear your debts in 1 week or within a few days. Remember, there are many credit counseling agencies that are scam agencies and can mislead you. Thus, you need to find out an authentic and legitimate counseling agency to get the best advice.
