Consumer debt counseling refer to the debt relief option that will involve an individual enrolling in a program run by a third party company or agency. This individual is usually buried in debt and would like to put their credit problems in order.
We all tire of living in between paychecks – especially when most of your income goes to your debt payments. We want a reprieve and someone who will give us direction as to how we should best tackle our credit obligations. Debt counseling is the perfect solution to your dilemma.
But while it is effective, you need to consider a couple of factors to make sure that it will provide you with the debt freedom that you want.
First of all, ask yourself if you can do it on your own. It does not take a rocket scientist to accomplish what a debt counselor can do. If you think that you have the patience and self control to stick to your debt payment plan, then you can probably skip this service. However, you tried it on your own and you haven’t seen a single improvement, then it is best to seek the expertise of a counselor.
Another consideration are the fees that will be asked from you. A debt counselor is usually free. You only encounter a fee if you ask them to perform debt management services that will involve the distribution of your payments to various creditors. The benefit of this is you can stick to one manageable payment scheme. For a fee of no more than $50, the convenience could prove to be useful in your attempt to grow your debt payment fund.
In any debt relief effort, your credit score is an important factor to consider. The same is true with debt counseling. Check how a prospect debt counseling agency will report your debt enrollment to credit bureaus.
Be careful of agencies who offer only one solution to you – especially if it focuses only on debt management since among all the services, this is the only one that they can earn from. They should offer budgeting and financial management advises too so you can learn how to stay out of debt. Be especially wary of their intentions if they propose a solution even before they have seen your financial documents.
When you begin inquiring with several debt counseling companies, do not be afraid to ask about their company. It should not be withheld from you. Not only that, ask specific information like how your creditors will be paid, are there compulsory fees and will you have access to the account that they will set up for your payments. You need to maintain full control of this account as it is your money after all.
Lastly, you need to make sure that any payment plan or debt management plan that will be created for you is something that you can afford. Never agree on anything that you know will stretch your budget to the limit. The benefit of debt counseling and debt management is having your monthly dues lowered. That means you should be paying less than what you used to – even with the service fee of the counselor. If this is not the case, then reconsider your plan.
The ideal debtor who opts for debt counseling are those who are not really in a financial crisis. They have more than enough to allot for their debts – or if they are short, it is only minimal. The bottom line is to make sure your monthly budget will not suffer further than what it is currently experiencing. If it is, then it can only be one of two things: you are not following the plan correctly or you need to opt for a different debt solution.