Posts Tagged ‘credit counseling and payday debt’

How To Choose The Best Credit Counseling Agency To Help Consolidate Payday Loans?

Yes, credit counseling can definitely help consolidate payday loans, but the results will depend on the efficiency of the credit counselor you have chosen. Having outstanding dues on multiple cash advances often makes it very difficult for the borrower to manage their debts on their own, let alone paying them off. If you are also finding it hard to keep up with your obligations in terms of payday loan payments, you may like to try options like debt consolidation and credit counseling. However, it is important for you to keep in mind that counselors are not magicians. They are just financial experts who can help you manage your debts and finances in a better way so that you can get things back on track. They can help you make some informed financial decisions to get you out of your debt problems.

Beware Of Unscrupulous Credit Counselors

The only problem is that not all counseling agencies are genuine out there. Many of them are involved in unfair practices with the bottom line to make as much profit as possible from consumers. They are more interested in making more profits for themselves than in helping you to get rid of your debt problems. Even the National Foundation for Credit Counseling (NFCC) has warned against those unscrupulous organizations. Recently, NFCC warned consumers against those organizations that work under “non-profit” labels but work in such a way that help their “associates” make more money from you. Therefore, when it comes to choosing the best credit counseling agency to help consolidate payday loans, you must know how to differentiate between genuine and unscrupulous agencies. Following are some important factors that you need to take into your careful consideration in this regard.

Accreditation And Membership

In order to ensure that the agency you are signing up with meets required ethical and quality standards, you should consider only those agencies that have membership to the NFCC or any other similar national organization. It is better to go with an agency that is also duly accredited by a reputable third party. The NFCC has strict guidelines that their member agencies must adhere to.

Check Their Records With The BBB

There are several organizations (that either work independently or under a government body) that gather information regarding complaints made against credit counseling agencies and make the records accessible to the general public with an objective to protect the rights and interests of consumers. The Better Business Bureau is one of them. You can contact the BBB in your area to find out details regarding a specific credit counselor you are considering working with to help consolidate payday loans. If there are already lots of complaints against that counselor, you must continue your search and try to find out another reputable counseling agency.

Review The Debt Management Plan Thoroughly

Credit counseling agencies offer an array of debt management plans for consumers. You are strongly recommended to review the plan offered to you thoroughly in order to ensure a few basic things, such as it must ensure timely disbursement of payments to the creditors. Some unscrupulous agencies take the consolidated payment for the first month but they do not send the payment to the respective creditors; instead, they keep it to themselves by calling it a “donation” or “fee”. Therefore, you are strongly recommended to ask the company to provide you a copy of their policy in writing in order to avoid the possibilities of any such hidden clauses. The agreement between you and the counseling agency must mention it clearly that the agency disburses the full payments within a couple of days (if not the same day) after receiving it from you. Always remember, when it comes to working with a credit counselor to help consolidate payday loans, the success relies completely on the fact whether full payments are being made to the creditors in a timely manner or not.

If A Claim Sounds Too Good To Be True, The Chances Are It Is

Many credit counseling agencies make big promises as if they have a magic wand to get everything back on track overnight. Be skeptical of such big claims. For example, many of them claim that they have “connections” and that they can fix your bad credit within a matter of just a few days. It is important to note that such instant fixing can never be done through a legal way. Repairing and improving credit score requires you to follow a set procedure that takes time, at least a couple of months. Therefore, it is often wise to stay away from agencies that offer “quick fixes”. All a reliable counselor can do is to talk to your creditors and negotiate a more affordable repayment plan in a way that allows you to manage your debts and finances in a better way than before.

Length Of The Counseling Session

The counseling sessions to help consolidate payday loans offered by a reputable agency must be substantive. Though the exact length of session may vary depending upon an array of factors, the counselor must take sufficient amount of time to get a clear picture about your debt and financial situation before offering any advice or debt management plan. A good thumb of rule is to choose a counselor who spends at least one and a half hour for the initial counseling session.

The Plan Must Be Tailored To Your Specific Circumstances

You must be wary of those agencies that follow a one-plan-fit-for-all strategy. A debt management plan that works for others may not work as efficiently in your situation. Therefore, it is always better to choose an agency that does not only offer a plan tailored to your specific personal circumstances but also offers a full range of services. For example, their task must not be just limited to working out a debt repayment plan to help consolidate payday loans, but they must also educate you on how you can regain control of your finances and avoid getting trapped into further debt problems. The agencies that are members of the NFCC often make a great choice in this regard, as they make their recommendations on the basis of comprehensive budget reviews.

The Agency Must Be Very Clear About The Fee Payment

A credit counseling agency charges a certain amount of fee for their services. Make sure you have clear understanding on how much you have to pay in terms of the fee and that how that fee is going to be charged. Some agencies charge on a monthly basis. Every time you make a consolidated payment, they keep a portion of the money as their fee. Some agencies even take the first couple of payments as their fee or donation. Therefore, before you sign up for a debt management plan, make sure you read the terms and conditions thoroughly, especially about the provisions regarding fee payments. The best credit counseling service is obviously the one that charges very little amount as fee and make full payments to the respective creditors in a timely manner. If your debts do not start reducing fast in a consistent manner, there is no sense in using a counselor’s service.

The Counselor Must Not Work With Selected Creditors Only

While you are looking out for the best counselor to help consolidate payday loans, you should focus on those agencies that work with all of your creditors, not just the selected ones who they have an association with. Be wary of those credit counseling agencies that asks your creditors to provide a certain level of financial support to them. After all, you are hiring a counselor, a mediator, to make the communication with your creditors smoother, not to worsen it.

Protection For Your Money

What if you make a payment to the agency and the agency loses it because of some fraud or because of its own financial difficulties? In order to ensure protection for your money, you must ask the agency to provide you some proofs and evidences that the agency has some kind of insurance to protect the money receipts from clients.

Overall, if you work on the above ten points thoroughly, you can easily find the best credit counseling agency to help consolidate payday loans. Your awareness about your legal rights can make all the difference.

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