Are your medical bills piling up? Credit cards? Collectors calling? Are you wondering how you are going to pay the rent next month?
A consumer credit counseling service can help you with your bills and learn how to work with your finances to get to a more comfortable position. Many consumer credit counseling services will help you set up a budgeting program and track your spending; taking into account your bills, needs, expenditures, and help you stay under your financial ceiling so you can get out of debt.
You will generally be required to discontinue use of any credit cards and not apply for any other lines of credit while in a consumer credit counseling service. This is yet another form of discipline which you will need to develop, but will be a huge benefit. Many consumer credit counseling service programs can take 48 months or more to complete, but studies show the habits you develop through the program last long after finishing the program.
Also, a consumer credit counseling service many times will negotiate with your creditors to get lower interest rates and/or lower principle for your debts. Depending on the organization, the success of the negotiations can vary. Your creditors will realize you are trying to make an effort in enrolling in a consumer credit counseling service, so they will be more likely to accept the lower payments rather than nothing.
The consumer credit counseling service will be the contact for your creditors, so they will stop calling you for collection notices. This will allow you to breathe a sigh of relief, but remember the bills are not gone. The way the consumer credit counseling service is set up has you send one monthly lump payment to the program, and then the program sends payments to your creditors.
Remember, even though the consumer credit counseling service is working in your behalf, it is still your responsibility each month to check over your bills. If the service set up lower payments with your creditors, waived late fees, low or no interest, you must review your bills each month to make sure the bills reflect these changes. It is also your responsibility to double-check the payment of each bill by the consumer credit counseling service.
Also, be aware most consumer credit counseling services only cover unsecured credit. You must continue to take care of your secured loans on your own, which means generally you will need to budget your mortgage payments and car payments into your monthly expenditures. If you cannot pay these, you run the risk of having the collateral repossessed.
Depending on the consumer credit counseling service, you may be required to pay a monthly fee, a flat rate or nothing. Shop around to find the one that fits you and is the best deal. Some programs are subsidized in part by the creditors themselves because they realize the service is helping them recoup at least some of their money.
If you do not make your payments regularly to the consumer credit counseling service, you are right back to square one. You will be required to start paying your creditors on your own again. But, if you will keep paying your payments to the consumer credit counseling service regularly, it will help balance their showing up on your credit report, as well as any charge-offs; many creditors will look at your regular payments and attempt to work through your financial difficulties as a step in the right direction and will actually be more likely to extend you credit than you might think.
By D. Blair Thompson