Consumer Credit Counseling Service

If you have used credit to purchase anything, you may be aware that the wise use of credit means doing what you can avoid the high-interest debt treadmill "for life!" If you watch television, listen to the radio, or read a newspaper, then you also know consumer credit counseling service companies seem to be EVERYWHERE these days. So too are consumer credit counseling service complaints. Like any in-demand business, there are good, bad and somewhere in the middle. The last thing any debt-ridden consumer seeking credit counseling services needs is help from a company that falls short on service, charges too much, promises too much, or fails to really get the job done.

Consumer Credit Counseling Service Reviews

So you're a candidate for credit counseling? You've may have read the consumer credit counseling service reviews online or in your local newspaper. You've looked for free credit counseling and you've looked to credit counseling government services; you've read consumer reports, or you may be well-versed because you've asked alot of questions. However, knowing it all - for any subject so broad and so much in flux - thanks to changing market and government regulations - requires a trustworthy information source.

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The bottom line, if you are considering credit counseling, know that it does not make debts magically disappear, however it does offer a proven path out of debt, if followed diligently. A credit counseling agency typically works with consumers, coordinating a debt management plan for the consumers, making proposals to creditors on the consumer's behalf -- requesting lower interest rates, a waiving of late fees and penalties, and generally more favorable, more affordable repayment terms. The bottom line, credit counseling can help consumers get back on track financially and get on an accelerated path to reduce debts. This is done by NOT accumulating new debt, and paying down existing debt, hopefully at lower interest rates -- to achieve a faster pay-down period.

All Debt Reduction Companies Are Not Created Equal

Are you a Florida resident with debt problems? If so, you may be relieved to know that there are debt relief services available that can help you reduce debts. However, as with any financial decision, it is important to do your due diligence regarding any debt relief company, check their BBB rating and feel comfortable with your understanding of the benefits you are likely to receive, the time required to realize those benefits and all other aspects of debt relief, including any fees.

Different Business Models

When it comes to debt relief, it is important to understand that all debt-reduction companies not created equal, and they offer dramatically different paths to achieve a common objective: debt relief. Here's the breakdown:

Credit Counseling Agencies / Credit Counseling Services

This includes "for profit" and "non-profit" with fee structures competitive enough so as not to make any significant difference in what services provided consumers will cost. Solutions provided from either result in the debtor paying IN FULL all outstanding debt.

The objective is to create better payment terms for the consumer, or debtor - requesting that creditors provide the consumer in distress more affordable terms via lowering interest rates, waiving fees, waiving penalties, consolidating all unsecured debt, and creating one manageable payment that the consumer can more easily afford.

If the consumer remains faithful to the debt management plan coordinated by the credit counseling agency, they can generally expect to be debt-free in three to five years. It is important to know that many consumers do not succeed with debt management plans because they do not have the finances, or the discipline, to stick with the plan for the entire period required. Despite this, debt consolidation programs or credit counseling programs offer the opportunity for debtors in need of help to get on a predictable path to reduce debts and regain control of finances.

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Debt Settlement Companies

Another type of debt-help service is a company which specializes in reducing the amount of debt owed, via arranging a "debt settlement". With debt settlement, credit card companies may agree to "settle" credit card debts for substantially less than the full amount owed: Debt settlement characteristics:

• Reduction to the consumer of the total debt owed
• May help the debtor avoid bankruptcy. Settlement typically damages credit, but it is not as long-lasting as bankruptcy
• Can help to get monthly finances back on track
• Can substantially reduce debt, but also lead to legal action while consumer defaults on payment terms and saves up money for a lump-sum settlement

Again, enlisting services of a debt settlement company does not, however, insure or necessarily stop creditors from pursuing other legal means to re-capture and collect the total outstanding debt. Once the debt settlement offer is made and accepted by the credit card company, the debt in question will typically be termed "settled as agreed for less than the full amount owed" and this can remain on a credit report for 7 years -- thus having less severe an impact on credit as bankruptcy which will remain on a credit report for ten years.

Debt Consolidation Loans

Debt consolidation loans allow consumers with massive or un-controllable debt payments to consolidate high interest rate debts into a lower interest rate loan. If done correctly it can reduce principal and interest paid, often shortening the payback period time. Let's be clear, a debt-consolidation loan is not for people who have trouble not using credit cards during the payback period. Debt-consolidation loans are often backed by a secured asset, like a home. While payments can be lower, if a person defaults on the loan, it puts at greater risk on the underlying asset, i.e. the home. You need to consult with an expert to see if a secured asset should be used to help pay-off an unsecured debt.

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