The most reputable credit counseling services are non-profit, but this doesn’t mean they all offer the same quality of service. The aim of non-profit credit counseling services is to help people who are spending all of their earnings to repay debt and have nothing left at the end of the month for savings.
There are many reasons people find themselves in debt. They may not have enough income to cover their daily expenses, they may have had to pay for an unexpected home or automobile repair or a huge medical bill. Whatever the reason, a non-profit credit counseling service can help them consolidate their debt so it can be quickly and easily repaid.
There are several trade associations for non-profit credit counseling. They include the Association of Independent Consumer Credit Counseling Agencies (AICCCA) and the National Foundation for Credit Counseling (NFCC). Each foundation has member agencies all over the country to help individuals and families get out of debt.
A good quality non-profit credit counseling company will often give applicants a free, no-obligation counseling session. Their debt situation will be reviewed, and they will be asked to think about their long term goals.
Counselors will examine the applicant’s expenses, income and debt including the interest rates. Based on this, the counselor will recommend a plan for spending as well as a budget. This is a very important step because it will not only help repay the current debt, but help people stay out of debt in the future. Non-profit counselors help with credit card debt as well as secured debt.
If the applicant is interested, the counselor will recommend a Debt Management Plan. The debtor must agree with this plan in order for it to be effective. This type of plan usually consists of a three to five year plan to repay debt, lower interest rates on existing debt, negotiation with the credit card companies to stop extra fees and penalties and freezing credit card accounts.
When looking for a reputable non-profit agency, people should ask about any fees right in the beginning. A good agency will be happy to give information about their fees in writing. People can also ask for references from the agency’s former clients.
Individuals and families don’t set out to get into so much debt that they are in danger of losing everything. Buying things on credit and getting loans for cars and a house doesn’t always translate into disaster, unless a person gets overextended. Then all it takes is an economic reversal, illness or loss of a job to create a problem. At that point, some sort of consolidation debt becomes a viable consideration.
The first thing to do when debt overwhelms you is to sit down and list every single debt. This includes all credit cards, including as gas, store and more general credit cards. List minimum payments and when each is due during the month along with the total owed and interest charged. List loans for the cars and house and any other loans, total owed, payments, interest and due dates.
Next, list assets: This includes wages and other work-related income, income from investments, interest, rent, alimony and any public assistance. List basic expenses for rent or mortgage, utilities, taxes, food, clothing, etc. After subtracting basic expenses, is there money left over? This is money that can be used to pay off debt.
With this information, credit counselors will assist you in finding a positive direction for your financial future. It may involve consolidation debt. They can negotiate with your creditors to reduce fees and interest rates. Then they’ll combine all of your monthly debt obligations into a single payment that is both affordable and can reduce your debts quickly.
Other options include consolidation loans, settlement, and bankruptcy, but these should all be avoided in almost all circumstances. Consolidation loans try to pay off debt with more debt, which can lead you to an even more dire situation than before. Bankruptcy and settlement can ruin your credit, making it impossible to perform a lot of financial activities in the future. Take the safe route and consolidate your debt to pay it off and improve your credit rating.
Once you’re finally out of debt, learn to stay that way. Make a budget and learn to live without credit cards.
In today’s economy, many people are struggling. The amount of available jobs is dwindling exponentially, and people have turned to loans and credit cards to make ends meet. It is completely possible to get in over your head. If you have an unexpected injury or illness, and have little or no insurance, you’ll be adding medical bills to this debt snowball and you may feel that you have no way out. There is no shame in this; it happens to even the most financially-savvy individuals.
The most important thing is how you handle unmanageable debt. You can always file bankruptcy, but this is a long, expensive and humiliating process. It also ruins your credit for at least seven years, and can cost you certain jobs for the rest of your life. If you ignore your debt, it won’t go away; it will only get worse. A debt with a few late charges can turn into a massive charged-off account with attorneys and collections agencies calling you non-stop. Eventually you’ll be facing a lawsuit that can drag you through the courts for years until you get it paid off. Not to mention that your credit will be absolutely ruined. The best approach is to handle it head-on. This can be a difficult process, which is why it is important to get a professional consumer credit counseling agency to help you.
A consumer credit counseling agency will sit down with you and make a comprehensive list of all your outstanding debts and monthly bills. They’ll figure out your monthly income and how much you can afford to pay on your debt. The debt counselor will then do all the legwork for you to get your debt to a manageable state. They will contact all of your creditors and work out payment arrangements that can include smaller payments and extended pay-off times.
Once you have a pay-off plan in place, you can begin paying off your debt each month until it’s gone. Some agencies require you to make the payment to them each month, and they dole out each creditor’s share themselves. Other agencies will let you pay your creditors directly, but they require some proof of payment.
Another benefit of using one of these services is that they can help you avoid creating any new debt. Most counselors will either close your revolving accounts, such as credit cards and charge cards, or have you do it yourself and provide proof of account closure. By removing the ability to make new charges, the temptation to create more debt is gone, and you’ll save yourself further headaches.
Consumer credit counseling services can help shoulder the burden and give you relief from the stress of debt, while helping you work your way free. If you are struggling to make ends meet, this can be your best option, and is worth further exploration.
photo credit: kharied via photopin cc
It’s been a long week. You’ve worked all day long, and your productivity level was through the roof! You stuck to your budget, packed your lunch and made cheap, versatile meals for dinner each night. It was exhausting!
Now, it’s the weekend. A chance for a mental break – to relax or have fun. A chance to finally get some work done around the house. It’s okay – you’ve earned it, truly. Be aware, taking a mental break from one aspect of life may make it easier to unwittingly take a break on other things. That’s where you can get into trouble with your spending.
The ‘vacation’ mentality is difficult to avoid, especially if you’ve put all of your energy into a facet of your life. The vacation mentality is what can permeate your life over the weekend, and your frugal spending habits can altogether disappear.
So, how can you avoid this weekend disaster?
Set aside cash for the weekend. Understand that you won’t be putting as much thought into your spending, so write a list of everything you plan on purchasing, and take out cash for those intended purchases. If you do this, you’ll preliminarily establish mental cues to keep your spending in line even when your heart isn’t in it.
Buy any weekend “treats” beforehand. Establish a plan for your relaxation, so you’re not planning in the throes of ‘vacation.’ Just like it’s a mistake to go to the store when you’re hungry – it’s never a good idea to purchase rewards when you’re feeling like you need to be rewarded. In both cases, it’s a recipe for overspending and regret when you come to your senses.
Enjoy the weekend, and stay smart!