| Debt counseling |
| Written by Jack Jean | |
What Is It?Debt counseling may be something you have heard of but don't know what it really is. Many people who are struggling with debt will need some form of help to get out of it. These types of programs offer various benefits to those that need them, but they are not for everyone. Generally, if you are struggling to pay the debts you have on unsecured debt, these programs may be able to help you get out. Yet, you'll need to be careful about approaching them.The Job Of CounselingDebt help can be obtained from these companies, but they do not offer you a loan. Rather, these companies work with the credit card lenders you have to consolidate the debts you have. You'll approach the debt counselors, request information from them and they'll start off by helping you create a monthly budget. That budget will outline what you need to pay for every expense you may have, including anything from food, to utilities and even to the costs for haircuts and clothing purchases. By setting a budget in place, they will determine how much money you can put towards your credit card debt.Once this is complete, the next task will be to talk to your lenders. With the amount of money that you can afford to pay to all of your credit cards in mind, the counselors for debt will call your lenders and negotiate a smaller monthly payment. In this way, they are helping to consolidate debt for you. The counselors generally have contracts or good standings with the credit card companies, which allows them to negotiate a lower monthly payment and also lower interest rates if possible. In some situations, they may be able to freeze the interest totally or even get you a lower balance. Once this has been complete, the true debt consolidation happens. You will make monthly payments to the debt counseling company rather than to the credit card companies. They will collect the payment from you monthly, in one large withdrawal from your checking or savings account. Once the money has been collected, they will then distribute the money to each of your lenders as they've agreed. In most situations, the process is set up to be automatically withdrawn from your account on the same day each month. What To Look ForWhen getting started with debt counseling, there are various things you need to do. First, be sure you are working with a non profit debt management company. They should be professionals who have experience. There is likely to be a monthly fee for using their services, which is used to pay for the counselor and service fees, but the company is not in the business of making a profit. Rather, they are working to improve the debt situation you are in, with your help. Many people find that these monthly payments are hard to make, yet, making them, regularly and as agreed generally will get you out of debt completely in any place from one to three years, depending on the amount of debt you have.Not everyone qualifies for this type of debt consolidation, though. For some people, they simply do not make enough money to pay all of their obligations. If this is the case with you, you'll need to carefully consider your situation, including getting additional income coming in. For some people, you may need to consider bankruptcy as well. Yet, for most people, debt counseling can be one of the best moves you make and it likely will save you money in the long run and in the short term. |
| < Prev | Next > |
|---|