If you are facing hardship with overwhelming debts and wanting to find a way to pay off unpaid credit bills, you can take help of a credit counseling service and get yourself out of this tight financial state.

What credit counseling means

To have a permanent solution to get rid of debts, you need to enroll yourself with a credit counseling agency. The agency representative will analyze your financial situation and help you to prepare a budget. He will then contact your creditors and negotiate with them for reducing your debt, by lowering your monthly payments. He may also negotiate with the creditors to waive off penalties for late payments and over limit charges.

Right time to go for credit counseling

You can go for credit counseling, if you come across the situations mentioned below:

• Finding no other way to get rid of debts, you are thinking of declaring yourself bankrupt

• Due to your financial hardship you have already missed making more than 3 monthly payments

• You are apprehending credit crunch in the near future

Factors considered by a credit counselor

A credit counselor, before rendering his service, will consider the following factors:

• Total amount of current debt balance

• Number of debt accounts you are having at present

• Your total monthly income and expenses

• Interest rates for each of the debt account

• Account having the minimum debt balance

• Minimum monthly payment amount for each debt

• Other expenses like, utility bills, tax, medical bills, insurance, etc.

Major types of credit counseling

There are 4 major types of credit counseling, namely,

1. Christian credit counseling
2. Non-profit credit counseling
3. Consumer credit counseling
4. Bankruptcy credit counseling

Advantages of credit counseling

The benefits of a credit counseling service are:

• Lower monthly payments: As the representative of the counseling service will negotiate with the creditors to lower your monthly payments, at reduced interest rates, your monthly payments will decrease and you can save more money.

• Helps to prepare a budget: The representative of the credit counseling service will render you his help to prepare a financial budget, based on your monthly income and expenditure. He will also educate you how to save extra cash and how to get rid of your debts within a shorter time.

• Re-rating of delinquent accounts: If you have already been delinquent, before you have opted for a credit counseling service, you can apply to re-rate your delinquent accounts, after you have made several payments.

• End of harassing calls: Once you opt for a credit counseling service, all harassing calls from your creditors will come to an end.

Before going for a credit counseling service, you should check the authenticity and reliability of the agency with the BBB. You can also take references from your friends and neighbors to ensure that you get the most of your money’s worth.

Useful Resources:
Credit counselling – Go for credit counselling and get out of debt