Are you wondering what credit card debt relief counseling is all about? This article can provide you with what you need to know about this debt relief option. When the bills keep stacking up and the bill collectors won’t stop calling, the feelings of despair can become overwhelming. It’s not that people don’t want to pay their debts. They might not have the funds to pay their debts, or they may be unable to manage so many payments – so they have to stand back and watch their credit scores plummet, to their dismay.
Many people find themselves in this position now because of bad economic times. Many of those have worked hard on their jobs, and on their credit scores, just to see both go down the drain because of bad economic times. This has made many folks feel hopeless, worthless, and depressed.
If you find yourself in this situation, you might feel as if there is no way out. But thankfully, there is a way out that might give you hope, and eventually get you out of debt. That hope is called credit card debt relief counseling, or just credit counseling.
Many people have heard of credit card debt relief counseling, along with other forms of debt relief and repair programs. All of these programs claim to be able to help consumers gain control of their financial health, and to help repair their credit. But there are fundamental differences between a credit counseling programs, and other programs.
In credit card debt relief counseling, you work with a professional credit counseling agent. Many of these programs are operated by non-profit agencies. As such, while there is a suggested fee, the fee is collected on a donation basis. Your credit counselor will task you with gathering up your credit reports, credit card and other loan statements, as well as monthly income and expense related documents. In this context, it may be helpful for you to be aware that if you live in the U.S., you are entitled to receive one free credit report each year from all three major credit reporting agencies. Once you collect all this information, your counselor sits down with you to look at the state of your financial affairs.
After any mistakes are identified in your credit report, your counselor will work out a debt repayment plan with you. The payment plan will be designed to be tiered. For example, a certain amount will be paid each month to all your credit accounts. That amount will be negotiated by the credit counselor with your creditors, on your behalf. As one account gets paid off, the extra money will be distributed to the other outstanding accounts. This process will continue until all of your outstanding accounts are paid off. And as you pay off your outstanding debt, your credit score will improve. And that’s how credit card debt relief counseling program typically works.
Credit counseling has worked out to be a great option for many people. The only real drawback, is that some creditors will report the account as being under credit counseling. In the short-term, this can look bad on your credit reports. However, this shouldn’t be much of an issue, especially if your credit rating is already looking bad because of missed payments and past due accounts. Besides, consistently paying all your bills on time, with the help of a debt management plan, can only improve your credit rating in the long run. And in any case, simply working through a credit card debt relief counseling program can help you regain your hope for your financial future.
