Tuesday, June 8, 2010

5 Benefits of a Credit Counseling Agency

Do you feel that your finances are going out of control? Are you debt amount burdensome enough? Does it seem that you can never break free of your debt? Well, if you are facing all these problems, you need not worry. Just consult a credit counselor who will help you free yourself of all financial burdens. Credit counseling is a process which offers education to consumers about how to avoid accumulated debts and how to repay your debts. Credit counseling establishes a planned method of debt relief, often with the help of a debt management plan.

Benefits of credit counseling

1. Implement a budget: It is the sole responsibility of a credit counselor to implement an effective budget for you so that you can get a grip on you finances. They provide you advice on money management to help you prevent future debt problems.

2. Attempt to lower interest rate: Usually a credit counseling agency attempts to lower your rate of interest in order to make it possible for you to pay off your debts easily. The creditors may often turn down this offer but this depends on the relationship that your credit counseling agency shares with your creditor. Generally reputable credit counseling agencies maintain a good relationship with the major creditors.

3. Advises to enter a debt management plan: The credit counseling agencies will advice you to enter into a debt management plan (DMP). Under a debt management plan, your counselors negotiate with your creditors to waive off late fees, penalties and even extend the term of the loan.

4. Single monthly payment through DMP: Credit counseling even gives you the benefit of a single monthly payment through debt management plan. You just pay monthly to the debt management company and they will later disburse the money to your creditors.

5. An alternative to bankruptcy: Credit counseling can be seen as an alternative to bankruptcy, offering individuals a chance to let a third party handle your finances and come up with a course of action other than bankruptcy. Credit counseling is an immediate requirement for a person who is about to file bankruptcy.

Once you join a credit counseling service, you will be able to get rid of creditor calls. The credit counseling agency will thereon negotiate with each of your creditors explaining them your situation.

So, enjoy the benefits of a credit counseling agency and free yourself of debt.