debt counseling

How to Find the Right Credit Counselling Services

November 3, 2013 by editor

There are many people that are struggling each month financially and this can increase the stress that people are under especially at certain times of the year. So, using credit counseling services is the first step in getting control of your financial situation, this is why it is important that you get this first step right.

There are many credit counseling services around and it is important to find the right one, the one that is going to help you and not make your situation worse. Many of these companies make some great promises of what they are going to do for you, but what you might not be aware of is that many of them fail to deliver even on their basic of promises.

What is important is learning how to find the right company and what questions you should be asking and why, before you sign any agreement with them.

Questions to Ask

Knowing the right questions to ask the credit counselling service is going to mean that you will spot the companies that you should walk away from. It will give you the power that you need, especially when you are in financial difficulty. Many people are able to use this weakness against you and this is why so many people fall into a trap, they allow themselves to be drawn into a company and agreement that isn’t good for them.

Free service – many companies will offer a free service and it is important that you get the information about what they offer for free. Some companies offer more than others, but it doesn’t mean that it is going to give you any more information. If it is a non-profit company they will still need to have money, ask where it is coming from, or when you are expected to start paying for the services they are offering.
Ask for fees and charges information before you get involved with the company. You might not like the prices that they are going to expect you to pay, it also give you a chance to see if you can afford their services.
Ask about details of the accreditation and qualifications that the staff hold. Are they qualified to do the work?

It is important to realize that those companies that are honest and genuine will give you all the information that you have asked for. They will not generalize any of their answers to you. But it is still important that you don’t sign up with the company until you have done your own research. You want to make sure that they are accredited and they have no complaints lodged about their services. A good way to judge a company is to make sure that they are capable to do what they are claiming and this is through clients that they have worked with, look up information about the company and if there are any negative comments that company might not be the right one for you.

What They Offer

Knowing what a company is going to offer can help you decide if that company is the right one for you. Do they offer more than just the counseling services? You need to find the credit counseling service that is right for you.

You can check to see if the company is registered with the NFCC, (National Foundation for Credit Counseling), they can give you information about good companies in your area, they should tell you about the companies that have complaints against them too.

As a minimum the credit counseling will help look at your budget and what changes you need to make so that you are in a better position financially. But they might also offer a debt management plan; this is where they get involved with your creditors. They might be able to reduce the interest that you are paying or get late fees removed, they won’t get you debt cleared that will take hard work and time on your part. But they might suggest that you pay them a set amount each week or month and they pay your creditor direct. The disadvantage with this is if they make a payment to your creditors late it doesn’t affect them it will affect your credit rating.

Check List

Check the services that they offer, do they meet your needs?
How do they set their fees? Are there any initial set up fees? Do they also charge a monthly fee? How much is this fee?
Ask the company what happens if you can’t pay? Will they help you and offer you advice and support? If they don’t then this company isn’t going to be the right company for you.
It is important to ask for a person to contact in the company, one that you can build a relationship with, if they refuse then each time you speak to the company they are either going to have to read your file or you will need to fill in your background again.

The Basis of Consumer Debt and How Counseling Can Help

October 8, 2013 by editor

There are a couple of broad causes of consumer debt that can affect everyone at one time or another throughout our lives. Understanding the causes and deciding to do something about it are the keys to improving your situation and becoming debt free.

Life Changes That Can Affect Consumer Debt

These are things that happen in our life that radically alter how we live our lives. If they have not been planned for with insurance or savings then we can be left with our finances badly affected.

Unemployment: One of the things that we all go through is losing our job. The economy is in the doldrums and many companies are looking at trying to become leaner and meaner.
Underemployment: Even if we manage to keep our jobs hours are being cut so we may also be faced with less income each week but the same amount of bills.
Emergencies: These are part of life and when a family member is hurt, an expensive possession breaks or costly repairs are needed then we can be faced with a situation where the only option is to use debt to stabilize the immediate situation.
Divorce: It is a sad fact that half of all marriages end in divorce and that everyone involved comes out worse financially. Previously shared costs must be paid individually and the separation of finances and income can be expensive as well. Being forced to sell assets in a poor market can be a huge financial setback.

Financial Management

These are things that you do to manage your finances and unfortunately it is all too common for people that are not confronted with a crisis to be very complacent about financial management. This can put us into a position where our level of consumer debt can destroy our financial position.

Budget: One of the vital things about understanding our finances is to have a budget. It can be simple or detailed but we need to have one. Without a budget then we do not know how much we can spend and if we need to make allowances for big bills in the future.
Check bills and statements: This is a basic thing that many people do not do. Before you throw the statement in the drawer or just pay the bill read it carefully and make sure that it makes sense to you. It is common for fraud, billing errors or unwanted services to pop up unexpectedly. You can have money being taken from your account or unused services being charged for. Without checking this money is being taken from you for no reason.
Savings: The best way to keep your financial position positive is to have savings. Savings act as a buffer and allow us to respond to financial pressures without going into debt.
Talk about finance: It can be embarrassing talking about your financial position even to a spouse. It is vital that everyone in your family know the financial position. This can enable the family to pull together and avoids pressure to spend on frivolous or unneeded items.

In some case we can make changes to our and our family’s lifestyle and spending habits and manage our consumer debt so that our finances are able to recover. If this is not working or you just do not know where to start then debt counseling may be helpful.

Debt Counseling and Consumer Debt

Debt counseling services can offer you a range of options once you have worked out with their help your financial position and your ability to back any debt that you have.

Budgeting and financial management: A debt councilor can help you by showing you how to make a budget and explaining some basic financial management techniques. This gives you the skills you need to be able to control spending and to get your debts under control.
Referrals: If you are using a community based or government sponsored debt counselor then they may refer you to an outside service that can help in a more hands on way. If you are using a commercial company then they will most likely have internal resources that can give more involved help.

These further services help to restructure debt and take a more active role in your finances and in communicating with your creditors. This can involve:

Negotiating with creditors to reduce interest rates or extending terms to make repayments fit into your current budget circumstances.
Building a repayment plan so that you have a complete schedule of what you need to pay and what you can spend.
Providing a managed repayment service where you pay a single amount and the provider takes care of payments.

All of these options have fees associated so you need to fully understand the proposed cost and how the plan will affect your credit rating before agreeing to the solution they have put together for your consumer debt.

Will Debt Counseling Get You Out Of Debt?

April 4, 2013 by editor

Debt counseling, while it is effective in educating you about your debt is still quite limited in terms of what it can really do for your financial troubles. You need to understand just what this debt relief option can accomplish and what you need to add to it so you can get out of your credit obligations.

First of all, this is concentrated on counseling. That means, you get a debt counselor to look at your finances and see where the problem is. You will rely on their expertise to help you understand what you did wrong and how you can arrange your finances to be able to afford your debt payments. Clearly, that is your priority. The debt counselor can also help you learn how to budget and point out financial management skills that will help you achieve and maintain a debt free life.

As helpful as all of these sound, that is as far as the assistance will go. Of course, you have the option to extend the service further but this will already entail costs. Debt counseling is free but if you want more assistance, you can enrol in a debt management program. For a fee of no more than $50 a month, the debt counselor will help you create a debt management plan that will allow you to make smaller payments every month. This lower amount happens because your debt amount will be paid off over a longer period. The counselor will negotiate on your behalf so your creditor will agree to it. In most cases, they will even ask the creditor to lower your interest rate and if accepted, that can lower your payments even further.

But if you are wondering if that is enough to get you out of debt, the answer to that is yes, but it will depend on your own commitment. In fact, any debt relief program only takes care of a part of the problem. Most of it will be reliant on your commitment and ability to get out of debt.

First of all, you need to have a steady income to afford your debt payments. There is no debt reduction in debt counseling. Although the monthly payment will be smaller, you still end up paying for the total amount of your debts.

You should also stop acquiring debts if you really want to get out of debt through this debt relief program. If you are still incurring debt because you or a loved one is still undergoing medical treatment, then rethink your debt relief option. This may not work well for you.

As you go through this debt relief program, you also have to develop and practice the right personal finance management skills. The debt counselor can teach you what they are but the implementation will be all up to you.

These practices include budgeting and saving. Budgeting involves creating a plan that will show you the income that comes in every month and every expense that it funds. It allows you to monitor if your money is going to your priority expenses.

The other important practice that you have to develop is saving. This will help secure your future and also, keep you from defaulting on your payments. Even if something happens, you can be assured that your debts will be funded.

All of these combined will definitely help make debt counseling an effective option to get out of debt. More important than paying off the debt that you owe is making sure that you will never be in another debt situation in the future.