Posts Tagged ‘consolidated credit counseling services’

Three Clear-Cut Benefits Of Consolidated Credit Counseling Services

When you sign up for consolidated credit counseling service, a financial counselor is appointed to look into your case. The counselor will do a thorough review of your current financial and debt situation and then offer you a debt relief plan customized to accommodate your specific needs. This way, you will get three clear-cut benefits, which are as follows.

The Terms Become More Favorable; Debt Becomes Completely Affordable

The consumer credit counselor you are working with will negotiate with your creditors to make sure the repayment plan is completely affordable for you. As a result of this negotiation, the terms are likely to be made a little more favorable, such as longer repayment period (which means lower monthly installments), reduced interest rates, and elimination of late fees and other penalty charges. In most extreme cases, the creditors may even agree to a debt settlement plan, where they accept a reduced amount of money (such as 30-70% of the total outstanding due) in several easy monthly installments or in one lump-sum payment as a full and final settlement of the debts.

Just One Monthly Payment; Managing Your Debts Becomes Very Easy

One of the biggest benefits of consolidated credit counseling services is that it makes debt and financial management very easy for you. Since a credit counselor works as a mediator between you and your creditors (or debt collection agencies), you get the convenience to make a single consolidated monthly payment to the counseling agency; it will then be the responsibility of the agency to distribute the money to your respective creditors. Though the task of the counselor is, in most cases, just limited to educating you on how to create and implement an efficient budgeting plan to make the debt repayment affordable and to make it easier to manage your finances, the agency will offer you additional services like taking care of your monthly payments.

Timely Payments Toward All Your Debts And Bills

Consolidated credit counseling programs are designed in such a way that ensures timely payments to all your creditors. In fact, when you follow the repayment plan thoroughly, you soon get current with all your debts and bills, within a matter of just a few months; the exact period though will obviously vary depending upon how deeply you are in debt and how good or bad your current financial situation is. The counselor who is working with you will make sure that all your debts and bills are being paid in time.

Updates In Credit Reports Are Monitored

How the debt repayments are being reported to the major credit bureaus is a crucial factor, but unfortunately, many people often tend to ignore this important aspect. Before you sign up with a consolidated credit counseling agency, you are strongly recommended to enquire about it and have a clear understanding on how the agency is going to take care of the credit reporting. If the creditors agree to a settlement program, they are likely to report the debt payments as “paid in settlement”, which is a negative entry and so will reduce your credit score. An expert counselor will do everything to protect your credit worthiness. They will convince the creditors to report the debt repayment as “paid in full”, which strengthens your credit history and so your credit score actually increases. A reputable counselor will monitor the updates in your credit report, making sure that the timely payments are being reported to the credit bureaus properly, in a positive way.

Though the benefits do seem to be highly lucrative, it is very important for you to keep in mind that consolidated credit counseling services are not available for free. The counselors charge a certain amount of fee for their services, which is generally a percentage of the total amount of debt they are handling. Before you sign up with any such program, make sure that the company is a genuine and reputable one and the charges are quite reasonable and that there are no hidden clauses. Read the fine terms thoroughly. Sign it only when you are 100% sure that the program can really work for you.

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What are the pros and cons of debt consolidation?