If the time comes for you to turn to the credit counseling agency in order to fix your debts, do not worry and never consider yourself a looser. According to the statistics over 8 million people have done the same in 2009, so you’ve got plenty of company.
Here are 8 main ways the good credit counseling provider can help you:
1.Offer free credit counseling session
The very first step is to review your debts. For this they will spend at least 1 hour or even more. This is really important step, since only the full understanding of your financial situation will help your agency to form the suitable way out of your financial misery.Sometimes the credit counseling agency in USA might ask you for the fee;in New York and other big states it’s still never higher than 100 dollars.
2.Show your financial reality
Be ready to show all your income and spending, this is really important for the counselor to create the adequate picture of your financial state and form the suitable plan of your payments. You can also get the set of advices about your new spending habits. However in most cases the situation is already way too serious and the debtor is in need of DMP (Debt Management Plan).
3.DMP and budget
The creation of your financial plan is an important step on your way to debt relief. You will be able to go on living normally; still you will get the opportunity to slowly pay off your debts.
4. Working with the debt
The non-profit credit counseling agency will work not only with you, but with your credit as well. Your debts will be reviewed closely, so that your monthly payments will not leave your pockets empty. The main goal of credit counseling provider in Atlanta or Houston or any other USA city is to solve your financial problems while having your mortgage paid and leaving you with enough money for everyday life.
5. Figure out if DMP makes sense for you
At this point the credit counseling provider will contact your creditor and negotiate with him about your debt to be paid within 5 years. Since the creditor already feels your financial situation through getting your payments late, he will most likely agree for the offer.
With the help of DMP you will have your debt payments fixed in 3 or 5 year plan, where they will go under lower interest rate (never higher than 10%). You will not be charged the additional fees like membership fee, late payment fee or overdraft fee. On the other hand you will lose the opportunity to use your credit cards since your accounts will be frozen until you pay your balance off.
Never agree on the DMP that doesn’t let you pay off your daily spending or offers too high monthly payments. Remember, only 25% of debtors are able to successfully sustain the DMP.
6. Define whether you do need to file bankruptcy
Usually out of ten clients one needs to consider bankruptcy instead of using benefits of DMP. According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 you must consider other options before filing for bankruptcy. If you choose the legal credit counseling provider in Florida or California and receive the statement about DMP being ineffective for you, it’s the right time to file for bankruptcy. However if you’re not ready for this, use other options, since no one will force you into bankruptcy.
7. Get the testimonials and references
Turning to the qualified credit counseling agency, you may ask for the references from the previous successful clients. This will be the real proof of agency’s level. In case you found the company in the Internet, this information will assure you in the good outcome of your financial situation. Do not hesitate to contact people in person and ask them about their experience.
8. Explain the fees
If the credit counseling provider is legal and honest, you will get the upfront explanations about all the charges and fees. This gives you the chance to consider if the policy of the named agency is right for you. There are cases when the first consultation is free since no one including you and agency manager knows if you will be able to use offered services. There’s always a chance you will have to resort to bankruptcy.
However if you choose to use the benefits of DMP, you will be charges the fee. It’s usually no more than $50 per month in USA, so you shall not be afraid for it to swallow all your income. However if even this little amount is not affordable for you, most non-profit organizations will still cooperate.
You will most likely spend several years crawling out of your financial pit; still all your efforts will be rewarded once you finally become debt free.