Consumer Credit Counseling

Consumer Credit Counselors, and your debt. There are tons of options when it comes to dealing with creditors , and your mounding pile of debt. You could go the route of hiring a professional credit counselor to handle the bill collectors for you. Some agencies are "not for profit" and others are. The difference does not really matter to the consumer , except for how much it costs. In many cases the price is about the same, it is all on how they do business. Either way you choose, make sure you are dealing with a legitimate firm. You must do your research on the agency that you are willing to trust your hard earned money with.

Here is how it works

1. They have you determine your monthly finances ( how much you take home a month)

2. What your expenses are? ( Mortgage or Rent, Utilities, Food, Misc ) Basically, everything you spend to live, and work , and play.

3. Then they want to know who you owe, and how much you owe to all accounts.

5. Then they will determine your disposable income. ( that is income after all your living expenses is added up and subtracted from your net income- what is left is called "disposable income")

6. They will then determine a figure based on your disposable income, and usually offer an estimated time table that it would take to pay off your debt.

QUICK NOTE: Make sure that you factor in a little extra money to set aside, just in case something goes wrong in life, ( ie; car trouble, home repair, any unexpected expenses.) A lot of people get into these programs , and never take into account of the unexpected. The unexpected is what lands them into this situation in the first place, turning the solution into a bigger problem than before. IF your outgoing expenses is higher than your income than you may not be able to participate in such programs, and might consider contacting a Bankruptcy Attorney.( see attorneys)

What a debt/credit counselor does, is take the money you pay them each month less their fees, and divides the funds among your creditors. They usually will drop your interest, or reduce it, and sometimes do it for slightly reduced amounts , depending on the creditors. The phone calls stop, and the debt eventually ( in time ) gets resolved.

There are actually credit counseling services that provide more drastic approaches, such as debt settlements. What this means is that they take your money each month, less their fees of course, and hold it until there is enough to settle. ( usually one creditor at a time ) You can save anywhere from 20% to 60% off total account balance. A lot of which depends on what your creditors are willing to accept.

Then there are some that are willing to go both ways, depending on your financial situation, and what your goals are. They are usually require more of your active involvement in tending to resolving your debt. Such as who you want to pay off over time, and who you want to go away more quickly. Usually they will have you settle your smaller ones, unless you have the money to go for the bigger ones first. You will have to work that one out.

A credit counselor that pushes you to take actions that is not in your best interest ( ie; "hard sell" ) you need to be cautious with them. There have been many law suite brought on against some agencies that have taken consumers money, and never applied any to the debt. ( See States Attorney General Office for Your State ) A lot of states have been cracking down on these companies that have went into this line of business with the intentions of ripping people off. There are good companies out there that are in business to help people, you just have to do your homework on them. A lot of them will usually be registered with organizations such as the "BBB" Better Business Bureau, and "NFCC" National Foundation Credit Counseling. You could check their status with these organizations to see if there any problems with the company. Also check your state's attorney general office as well.