Getting help through a credit counselor can be effective in helping you solve your debt situation. With the number of people struggling with bad credit situations, debt experts are needed now more than ever.
According to a survey, 6 out of 10 consumers admitted to having debt relief as a main financial concern. These consumers treat it as more important than funding their retirement or their children’s college fund. This is just an indication that they understand the effects of having too much debt in their life. The faster they can get rid of it, the easier it will be for them to improve their financial situation.
While there are people who can get themselves out of debt, there are those who need professional help. Some of these folks find it hard to understand and choose among their options. Others need help because they do not have the time to get to know their options. They need someone who already knows the answers. It will help them get to the right debt solution faster.
There are also times when people just do not want their inner circle to find out about their debt struggles. They opt to find a debt expert because, although practically strangers, these professionals can help ease their debt burden.
Without a doubt, getting a credit counselor will make your financial progress significantly easier. But before you decide to use this as your way out of debt, it is important for you to get to know it further.
Different ways a credit counselor is beneficial
Having a credit counselor working with you is one of the best ways to get debt consolidation help. These debt experts bring these benefits to your financial life.
Custom-made repayment plan
There is no one-formula in getting out of debt. In fact, the most successful and effective debt relief programs are those that are custom-made for the consumer. Credit counselors can help with this through a debt management plan. They only need an honest account of your debt and financial situation. This will allow them to create a repayment plan that you can afford and one that your creditors and lenders can accept. Since this is based on your finances, there is a higher chance that you can stick to this budget and see it until completion.
The expertise of the credit counselor can also help you get better repayment terms on your debts. Those in the credit counseling industry usually have a good working relationship with creditors and lenders. It is more likely that they can negotiate better terms on your behalf. This includes a lower monthly payment, lower interest rate, or even a shorter or longer repayment plan. This is what allows them to create the debt management plan that is like a personalized repayment plan. Through their experience and expertise, you can come out with a more affordable monthly payment that will help you save a lot of money in the long run.
Simplifies monthly payments
Did you know that 1 out of 4 American consumers fails to pay their bills on time? The truth is, the more bills you have, the harder it is to monitor your payments. Working with a credit counselor can solve this issue. These debt experts can simplify your payments each month. The debt management plan that they will create for you will include multiple debts that you owe. You just have to give the credit counselor one monthly payment that is the combination of all your debts. They will take care of sending it to your different creditors and lenders.
Since your debt payments are simplified, you do not have to feel too stressed about your debt situation. Although you still have a lot of debts, it feels like you only have one because you are only sending one payment every month. Not only that, you do not have to worry about paying them off one by one. The credit counselor will take care of that for you. They will even take care of communicating with your creditors and lenders. You can say goodbye to the harassing collection calls. With the stress level going down, you can focus on other important things. In fact, you can take advantage of this by focusing on increasing your income to pay off your debts faster.
Financial education on the side
Finally, having a credit counselor work with means you get personal finance lessons on the side. This can even start during the first consultation with the debt expert. When you discuss your debt and financial situation, you can learn more about financial management. This includes budgeting, saving, smart spending, and the basic tips that you need to keep away from debt. As long as you ask for it, the credit counselor can guide and help you improve your financial habits so you can secure your future.
What happens during credit counseling
When you enroll in credit counseling, there are a couple of things that you can expect.
It all starts with the credit counselor analyzing your financial situation. They will look at your bills, expenses, debts, and income. They will try to understand what got you in your debt situation. This can be helpful when they create a plan for you to get out of debt. They will make sure you will not just eliminate your debt. They will also ensure you will improve your financial future in the long run.
Creating a plan
The next step is to create a budget plan that will help put all your financial transactions in order. This will also be useful as the credit counselor creates the debt management plan – which is another plan that has to be created. This will map out your monthly debt payments. When the budget and repayment plans are aligned, it is easier for you to ensure that every debt payment is funded. If not, you can make changes to your expenses so you can fund your monthly payments.
Once the plans are created, the credit counselor will communicate with your creditors and lenders to propose the debt management plan. They will try to convince them to accept the new terms. Not only that, but they will also try to negotiate for a lower interest rate. That will help you save a lot of money over the course of the debt payments.
If the creditors and lenders accept the debt management plan, it is time to start paying. You will send one payment each month to the credit counselor. This is the total monthly dues based on the repayment plan. The credit counselor will be responsible for disbursing the funds to your different creditors. While you are making payments, you will not be allowed to use the credit accounts you are paying off.
It is important to remember that you should not stop paying your original debts until the debt management plan is approved by your creditors and lenders. You need to wait for the credit counselor to tell you that you can shift your payments to the debt management plan. It is also a good idea to call your creditors and lenders to confirm that you will now be making changes to your monthly payments. Once everything is in order, you can now start paying through the credit counselor.