Debt counseling is not limited to credit card woes. This counseling helps consumers with outstanding bills, loans, etc. Usually, the counselor will help to consolidate the mounting bills into one easy payment. Debt counselors will work with you and try to devise a “game plan” that is best for you. Here are some things you should keep in mind when you visit a debt counseling agency.
They will ask lots of questions
Counselors will discuss your various types of debt. They will ask you questions about the balance and the length of time you had the bill. Usually, the counselor will try to reduce your interest rates by negotiating with your creditors.
A debt management plan
If the “game plan” scenario does pan out, counselors may suggest you enroll in a debt management plan. In this scenario, the person in debt will cut one check to the agency. The agency, in turn, disperses the money to the creditors. Please note that the agency will earn money from the creditors if you choose this option.
Creditors may give you a break
Creditors may be impressed that you decided to consult a counseling agency. They may think you are now determined to eliminate your debt. Sometimes, creditors may cut your debt significantly because of your determination. Banks will also take notice.
Consultation may be free!
Some agencies offer free debt counseling. If you are savvy enough, you may figure out how to eliminate debt on your own. Usually, however, you may have to take on their services simply because of interest that accrues on your various bills.
Pay monthly payments on time!
This sounds like a no-brainer, but when customers establish a relationship with the counseling agency, they may slack off on their consolidated monthly payment. If you fail to make monthly payments, it will reflect on your credit report for up to seven years. If you do make monthly payments, always pay more than the minimum monthly balance. If you only pay the minimum monthly balance, you will guarantee yourself years of debt due to added interest.
Check out the agency
It is very important you get information about the agency that you plan to do business with. Check out the Better Business Bureau. If you can’t find information, talk to people who have dealt with these kinds of agencies before. If they give the thumbs up, still make sure you ask a lot of questions when visiting the agency.
Don’t give up information easily
If an agency solicits you over the phone, do not give out personal information. Only do that if you agree to work with them – in person. The person on the other end of the line could be a con artist, so watch out. It is advised that you seek out a debt counselor, not vice versa.
Know the law
There are currently no existing federal regulations for these types of agencies. In fact, only 17 out of 50 states have at least some laws on the book regarding debt-counseling services. If you need some guidance, it is advised that you contact the National Foundation of Credit Counseling (NFCC) to see if your prospective agency belongs to this 50-year-old respected organization.
Remember, try to make a budget for yourself before you have to go to a debt counseling. Planning for the present will help save money in the future.
By Michelle Presbury