Debt is the single biggest roadblock to building up a nice nest egg. It adds financial pressure that quickly overwhelms you, and leads to an endless list of stress factors across the board. Debt is not something unique to people who live beyond their means, but it is quite possible for anyone to incur debt problems, especially if they do not excel in debt management.
The loss of a job, illness, death, dramatic life changes etc. can all have a crushing effect on your finances. Once you find yourself in debt, it’s important to use all available tools at your disposal to manage that debt effectively, and emerge as unharmed as possible. There are several ways for you to do that, including debt consolidation, debt management, debt settlement, and the most important component of all, credit counseling.
Benefits of Credit Counseling
The benefits you get from credit counseling services are dramatic and life-changing. Many people get into debt as a result of poor financial management skills. If you’re spending more than you’re bringing in, you are likely to end up in debt. There is a limit to how much you can spend of other people’s money before they start calling in their markers.
When you pass a certain threshold, you will find yourself in a debt trap that seems impossible to get out of. That’s where sound financial management – an education in credit counseling – can help you to right the wrongs of your ways.
You begin by working hand-in-hand with a credit counselor who will provide you with an in-depth assessment of your personal financial situation and how best to eliminate your debts. Credit counseling organizations are not cut from the same cloth. Some are better than others.
Fortunately, all the accredited counseling agencies are expertly skilled to provide you with the services that you need for debt relief, debt management, debt consolidation, and debt alleviation.
Reputable Credit Counseling Agencies
Credit counseling services will tell you everything you need to know about things like Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 13 bankruptcy. You may or may not find it in your best interest to file for bankruptcy, depending on your personal financial situation, and state/federal rules vis-à-vis bankruptcy filings and your assets.
Credit counselors work with households and individuals to create effective plans to tackle debt head-on.
The services provided by these credit counseling organizations are free of charge, at least initially for the first consultation.
Counselors are part and parcel of various accredited groups such as the AICCA (Association of Independent Consumer Credit Counseling Agencies), or the NFCC (National Foundation for Credit Counseling).
These agencies will work closely with you to provide you with all the necessary information to restore your financial well-being and tackle your debt problems.
Not everybody understands the most effective money management skills, but they are imperative in today’s world. Once you have a workable plan ready for you, you can get to work paying down your outstanding debt, and restoring credibility to your credit profile.
The biggest problem for people nowadays is credit card debt. The latest figures indicate that some $1.021 trillion in outstanding revolving credit now exists in the US economy. This is the highest level in history, and it is increasing at a rate of 4.9% per annum. Credit counseling agencies are tasked with helping individuals to pay down their credit card debts, personal loans, business loans, mortgages, auto loans, and student loans as effectively as possible.
Stick to The Debt Management Plan
There are many agencies and organizations out there that will charge fees for offering credit counseling services. Be careful, because it’s important to work with reputable organizations.
Ask questions so that you always know exactly what fees you will be paying, if any at all, and whether the debt counseling company is licensed and regulated to offer services in your location.
How are the credit counselors compensated? This will be an important factor when you consider how much you will be paying to settle your debts, so again, ask upfront.
An alternative is to consider an option like debt settlement, where the company negotiates with your creditors to agree to a debt settlement figure, which is usually lower than what you owe the creditors.
Or, a third option is for you to apply for a debt consolidation loan. These loans are offered at a lower rate of interest than the prevailing interest rate on your debt, and they consolidate all similar debts into a single repayable loan.
Once you choose your debt management plan, be sure that you understand your monthly and annual fees, the plan itself, and how you will stick to it.