When people around you are driving expensive cars and living in your dream home, it can be hard not to spend money. Because credit is so easy to get today, people forget that they have to pay back the money they borrow on credit, plus interest, when they are spending it.
Even smart people can sometimes be optimistic about their ability to pay back a loan in the future. They take out a loan because they think that the monthly payments won't be too hard to make. Later, though, it may become clear that the payments and money owed are too much for them to pay and are beyond their financial means. When bill collectors start calling, consumer counselling may be a good option for helping to settle credit card debt. Here are some tips to help you find a good consumer counselling service if you can't pay off your debts or settle them on your own.
You can start your search online or in a phone book, but watch out for scams. If the company says they can fix your credit in a very short amount of time, you should be worried about them and keep looking.
Credit counselling services that are reputable and trustworthy will have you pass some tests before they take you on as a client. Each company's requirements may be different, but in general, you need a source of income and a small amount of unsecured debt. If you are having trouble paying back secured debt, like a car loan or mortgage, they may not be able to help you.
When you meet with your credit counsellor for the first time, be sure to bring copies of all your loan or credit account statements. They will need to know details about your finances, such as how much you owe to creditors, how much you pay each month, and the interest rates.
After that, it's up to the counsellor to decide what to do. They will talk to your creditors and work out a new monthly payment and lower interest rate. You can choose to take care of and send in the payments yourself, or you can pay the counselling service all at once. If you choose the second option, the counsellor will pay your debts for you. Once a plan of action has been made, the counsellor will help you make a budget to improve your overall financial situation. A budget will help you avoid getting into debt and other money problems in the future. There is even software out there that can help you keep track of and manage your budget. You can always ask your counsellor for help when you need it.
One last thing: don't count on being able to use your credit cards while you're getting credit counselling. Sometimes, the service will ask you to cancel your cards or stop using them until you have paid off your debt and fixed your credit.
