People try to get out from under the weight of debt that is holding them back in many different ways. Most people have heard of different ways to settle credit card debt, like debt negotiation and settlement, but they often get these methods mixed up with the term "consumer debt counselling." Before deciding how to deal with credit card debt, people need to know the difference between these two terms. If a consumer goes to a counsellor for help, that counsellor will work with the person to find a way to lower the monthly payments on outstanding debt so that it can be handled.
Some people aren't sure when they should start thinking about getting help from a credit counsellor. If bill collectors or collection agencies call you often, it might be time to find a good counsellor.
First, remember that not every credit counselling service is the same. There are a lot of companies that offer these services, and while most of them are legit, some of them are scams that will put the debtor in an even worse situation than before. If someone offers to get rid of your debt right away, as if by magic, that's a red flag. Credit management isn't easy, and that's the same for everything else. These answers just aren't possible. Instead, find out as much as you can about the company. If the Consumer Credit Counseling Services has given the company its seal of approval, that's a good sign that it might be a good fit for you.
After you choose the best company for you, it's important to be completely honest with the counsellor you're given. This person is there to help you, and if you don't tell her what she needs to know, she won't be able to do her job. After you tell the counsellor about your situation, he or she will start to put things in order. The first step is to talk to your creditors and try to change both the payment plans and the interest rates.
Some people have heard of debt management plans that require a one-time payment to the company, which is then used to pay the monthly bills. One problem with this strategy is that even good credit companies make mistakes sometimes, and if you miss a payment, it will hurt your credit score. Because of this, many people decide to take care of their own payment plans after figuring out the best plan with their counsellors.
Creditors often sponsor legitimate businesses as non-profits, which means they don't charge a lot for their services. Companies that ask for a lot of money up front are likely scams, so you should stay away from them and look for a different one.
You should also know that using a credit counsellor may hurt your credit score because it shows that you have spent more than you can afford and are in trouble financially. But in the long run, it would probably hurt you more if you didn't make any changes and tried to clean up on your own. After all, this is what led to the debt in the first place.
