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How does credit counseling work?
January 11, 2011
4:27 pm
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purplesaber
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I think I am in need of credit counseling, but I'd like to know more about how they work. Do they charge fees for helping you? I mean, how does it work if you are already in a lot of debt?

January 13, 2011
9:36 am
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chinadoll
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If you are able to arrange for re-payment directly with the creditors, this is the best way to handle it. Most credit counselors do charge fees. Often the money that is used to pay them could have re-paid the debts directly. Also, relying on someone else to handle the efforts toward repayment does not teach you how to change spending habits or discipline a person to save and make choices that are conducive to getting "back in the black."

There are some agencies that do not charge fees. I can't think off the top of my head, but when I find it, I will re-post it.

My ex-husband caused a huge amount of our debts when we were married. Now that we are not married, my financial situation is slowly getting better. I also had my identity stolen, so a lot of what looks like my debt is not actually "mine". Working on that, too. It has been a nightmare.

January 13, 2011
12:49 pm
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purplesaber
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chinadoll said:

If you are able to arrange for re-payment directly with the creditors, this is the best way to handle it. Most credit counselors do charge fees. Often the money that is used to pay them could have re-paid the debts directly.


Thanks for responding. Those were my thoughts too.

I also had my identity stolen, so I have been very cautious and watchful with what's going on in my credit report. So now, I am trying to fix what is mine.

January 14, 2011
2:40 pm
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Francine
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I needed debt counselling about ten years ago - I was not charged any fee and I found the counsellor very unjudgmental and easy to talk to, she provided a draft letter to adapt and send to each of my 2 creditors offering what I could afford each month and referring them to her if they contested the amount. That did the trick. Apparently creditors cannot demand more than you can reasonably afford.

Francine

January 15, 2011
9:20 pm
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AnxietyRUs
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My wife and I went to a credit counseling service many years ago. This one was free. We brought all of our bills and she went over them. She questioned us about our spending habits and worked on cutting corners as much as possible. The only thing wrong with this credit counseling service is that there was no "give" or "back and forth" discussions with her. She was young and insisted her way was the only way we could do it. I found it quite difficult to implement some of her changes so we didn't follow the plan she laid out. Others may have had a better experience than we did but it just didn't work for us.

January 17, 2011
12:28 pm
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Amity11
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chinadoll said:

If you are able to arrange for re-payment directly with the creditors, this is the best way to handle it. Most credit counselors do charge fees. Often the money that is used to pay them could have re-paid the debts directly. Also, relying on someone else to handle the efforts toward repayment does not teach you how to change spending habits or discipline a person to save and make choices that are conducive to getting "back in the black."

There are some agencies that do not charge fees. I can't think off the top of my head, but when I find it, I will re-post it.

My ex-husband caused a huge amount of our debts when we were married. Now that we are not married, my financial situation is slowly getting better. I also had my identity stolen, so a lot of what looks like my debt is not actually "mine". Working on that, too. It has been a nightmare.


Great advice ChinaDoll!  Not everybody is a perfect fit for credit counseling agencies.  If you can cut enough expenses and pay more than your minimum balance, or you could talk to your creditors for a more comfortable repayment plan, then do it. Also, if you can correct errors on your credit report, all the better for you and your credit score.

I do not agree, however, that talking to credit counselors is a waste of time.  They can help you handle your finances by giving you advice on a lot of things related to your financial matters.

January 19, 2011
7:21 am
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mimimimi
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Basically, credit counseling services help you negotiate with your creditors to give you some slack.  They may have some of your debt forgiven, or at least your interest rates lowered.  Some can even negotiate for you not to have any interests at all.  It helps if you are seeking help from bigger firms, because they actually have arrangements with creditors such as the larger credit card companies.  This lessens the time needed for you to have a more manageable debt.

January 19, 2011
9:43 am
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beatrize
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Yup, that's about fair. Some credit counseling service also act as debt collectors for these larger firms, as creditors would give them a good percentage for what you pay under the debt management plan.

January 19, 2011
12:36 pm
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jenniferaniston
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If you have good income, then don't think that you can go into credit counseling. For the most part, you have to prove that your debt is bigger than your ability to pay.

January 20, 2011
11:34 am
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6yroldkid
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Credit counseling services also give you a good time frame to pay off your debts. Most debt management plans give you 4 years to complete!

January 20, 2011
6:28 pm
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yecharu
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What are the debts covered then?

January 20, 2011
6:29 pm
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yecharu
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AnxietyRUs said:

My wife and I went to a credit counseling service many years ago. This one was free. We brought all of our bills and she went over them. She questioned us about our spending habits and worked on cutting corners as much as possible. The only thing wrong with this credit counseling service is that there was no "give" or "back and forth" discussions with her. She was young and insisted her way was the only way we could do it. I found it quite difficult to implement some of her changes so we didn't follow the plan she laid out. Others may have had a better experience than we did but it just didn't work for us.


Hi there, please do share with us what the service's name was and how we could get in touch with them?  What area are you in?  How did you find them?

Thanks!

January 21, 2011
12:59 am
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XanaxDid
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Well, for the most part, all your unsecured debt is good to go for a credit counseling company. Credit card debt, collection agencies, unpaid medical, legal or dental bills, bank loans that are unsecured and auto loans. Typically a lot of your debt may be subject to their service.

January 21, 2011
10:16 am
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hiddenobject
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I was wondering what alternitive would work better for me.

1. Not attempting to pay for unpaid non-secured credit card debt that I walked away from 2 years ago and waiting for the statue of limitations of 7 years to erase it from my credit or...

2. Take the offers from whoever bought my debts for a lot less than what I owe. I really can't afford this option

3. Try to negotiate lower balances on my owed/closed accounts. I would need to make monthly payments. I am afraid that might take forever & by the time that is done the 7 year limitation if I don't pay would have been up.  Again, I can't afford much if anything.

I did call a credit counselor a while back. I don't recall the details. I think there was an issue about fees being charged, direct payments being taken out of my account. It wasn't right. Something about it didn't sound right.Surprised

 


January 21, 2011
6:03 pm
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Alise
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Yes, you have to be careful because there are a lot of scams posing as credit counseling services out there. You should probably check for references if possible, to help make sure the one you choose is a reputable service. 

January 21, 2011
7:11 pm
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hiddenobject
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I don't think credit counseling will work for me. R there any credit counselors here?Laugh

September 19, 2011
10:41 pm
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creditguard
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Alise said:

Yes, you have to be careful because there are a lot of scams posing as credit counseling services out there. You should probably check for references if possible, to help make sure the one you choose is a reputable service. 


Agree with you but if you get help from counselor then you first check company profile, reputation in the market, their professional experience and so on.
 

Good credit counseling companies provide only onecounselor that can understand you and you also clear your points, they never change your counselor without reason again and again nor refer you.

December 8, 2011
11:33 pm
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donnacredit
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they provide you the way out... 

specially for those people who are not familiar with the pros n cons of debts.. 

February 27, 2012
4:47 pm
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socal
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purplesaber said:

I think I am in need of credit counseling, but I'd like to know more about how they work. Do they charge fees for helping you? I mean, how does it work if you are already in a lot of debt?


Usually, a credit counseling agency will get you a lower interest rate on your credit cards in order for you to pay them down.
 

You can usually expect to pay back your entire balance on the debt that you owe and anywhere between six and twelve percent of the interest. This is about half of what your normal interest would be. If you have more than $10,000 in debt, Call Now to get your free consultation 888-791-7297. Mon-Fri 7:00am-5:00pm (all times Pacific).

July 26, 2017
6:34 am
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persson
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