Debt Counselling Info

If you are looking for more information on debt consolidation counseling, you’ll want to read this article. Specifically we’ll discuss the benefits and drawbacks of debt counseling as well as provide you with a list of questions to ask any counseling agency you are considering working with. By the end of this article you’ll have a better understanding of debt counseling and will be able to determine if the benefits outweigh the drawbacks in your situation.

Benefits of Consumer Debt Counseling

If you find yourself with more credit card debt than you can handle, consumer debt counseling may be able to help you. Here are a few of the benefits.

• The primary service that these counseling agencies provide is to negotiate with the credit card agencies on your behalf. The goal of the negotiations is to get you a lower interest rate and, if you owe any late fees, get them waived.

• The consumer debt counseling agency will use the savings they have negotiated to consolidate all of your payments into one lower payment. Generally you make this payment to the debt counseling service and they disburse the payment for you.

Drawbacks of Debt Consolidation Counseling

While debt counseling can be a huge benefit, there are a few drawbacks to be aware of.

• In many cases, when you enter into debt consolidation credit counseling, the cards you consolidate will be closed. If you think you will need access to the credit available on your cards, think carefully before beginning counseling.

• Your credit report will note that you are in credit counseling for each card you consolidate. This notation will significantly impact your credit score in a negative way and will remain on your report for as long as you are in the program. Depending on how much you owe, this can be several years.

• It can take over 30 days for your first payment to the debt counselling agency to be processed, which means in your first month you may need to pay the agency PLUS your credit cards. Be sure to investigate this if you cannot afford a double payment.

Questions to Ask Before Beginning Debt Counselling

Before beginning any debt counselling service, speak to a representative of the agency and be sure to ask the following questions. A wise idea is to get the answers to these questions in writing, and be sure to read the fine print of any agreement you sign.

1. Are there any fees involved?
2. When I make my first payment, how soon will it be forwarded on to my credit cards?
3. Will my credit card payment due dates be adjusted to coincide with my payments to the credit counseling agency? Will this happen automatically or do I need to call each credit card to make the change?
4. How does your agency make its money? Is any of the income that the debt counseling agency brings in coming from the credit card companies?
5. How will entering into your debt consolidation credit counseling impact my credit?

Conclusion

Credit counseling can help negotiate your interest rates to more affordable levels, and even possibly eliminate late fees. However, credit counselling will also negatively impact your credit report and may require a double payment in the first month. Before you enter into debt counseling, ask yourself if the benefits outweigh the drawbacks.