Submerged by an avalanche of credit card debt, an increasing number of Americans are sending out an S.O.S. to consumer credit counseling services. Typically, help comes in the form of advice relating to money and debt management as well as guidance on the responsible use of credit. Consumers who consult reputable credit counseling agencies are particularly satisfied with the results brought on by the implementation of promising and life-changing measures.
Financially-overextended individuals and families should expect to find, at their local agency, a panoply of consumer credit counseling services, including the following:
1. Analysis of a debtor's financial situation
Credit counselors will thoroughly examine their clients' income, assets and liabilities, and expenditures. By conducting a comprehensive evaluation of a debtor's financial data, including consumer credit such as credit cards, counselors are able to accurately assess the former's specific financial circumstances to see if they are in need of credit repair.
2. Budget counseling
Since a healthy, reasonable budget is the most potent mechanism for debt prevention, budget planning constitutes an indispensable consumer credit counseling service. Credit counselors assist debtors in developing a customized, workable budget that strikes the proper balance between income and expenses and that corresponds to the latter's lifestyle and income. They teach their clients how to set aside emergency funds and how to track spending.
3. Planning to avert future debt
Credit counseling can help debtors construct a personalized plan to resolve also any future debt issues that might arise. In furtherance of this objective, counselors provide money management and budgeting recommendations to their clients.
4. Effective negotiation with creditors
Consumers can benefit from the superior leverage in bargaining that credit counselors bring to the negotiating table. Among the goals and concessions that credit counselors can achieve in negotiations with a debtor's creditors are the following:
5. Establishment of a manageable repayment program
Credit counselors work with clients and their creditors in setting up a debt repayment plan that is mutually acceptable and equitable. The consumer credit counseling service known as a Debt Management Plan (DMP) enables debtors to pay down their outstanding debt by making one convenient monthly payment to the agency, which then disburses it to each one of the debtors' creditors. Customers who enroll in a DMP benefit from fewer collection calls and lower or waived finance fees. Upon satisfying their payment obligations, debtors can rely on the consumer credit agency to help them reestablish their credit and raise their credit score.
6. Debt proration
This is another popular consumer credit counseling service, whereby 1) counselors negotiate new terms with their clients' lenders, 2) debtors submit their paychecks to the agency, and 3) the agency sends the lenders a payment each month and pays the clients an allowance.
7. Free workshops and educational materials
8. Critical events counseling
Credit counseling agencies usually offer assistance to debtors who are undergoing one of the following life events:
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divorce
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identity theft
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loss of employment
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home purchasing
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death of a loved one
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single parenting
Consumer credit counselors, who are trained in addressing the financial repercussions triggered by such stressful events, will design a plan that will tackle their clients' monetary difficulties and help them meet their goals.
9. Reverse mortgage counseling
Reverse mortgages enable homeowners to live in their residence while extracting equity from it. Credit counseling agencies will assist consumers in evaluating whether such loans are appropriate for them and whether they meet their need.
Finally, in researching credit counseling agencies, consumers should find out which ones are members of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC), the largest and most prestigious networks of credit counseling firms.