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 to avoid the high-interest debt treadmill for life - which may mean you have used a consumer credit counseling service. 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 get the job done.
Consumer Credit Counseling Service Reviews
Are you a candidate for credit counseling? You may have read 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 have asked a lot of questions. However, knowing what debt relief means requires a trustworthy source.
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If you are considering credit counseling, remember, 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, 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 generally 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 struggling with credit card debts? 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 Better Business Bureau (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 often very similar so as not to make any significant difference in what services provided consumers will cost. Be aware that some "non-profit" credit counseling agencies use the "non-profit" terms to market their services, and they aren't necessarily superior or more "consumer-friendly" than other "for-profit" counseling agencies.
The objective is to create better payment terms for the consumer - 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 and more affordable payment plan.
If the consumer remains faithful to the debt management plan, they can generally expect to be debt-free at an accelerated pace. 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 service is a company which specializes in reducing the amount of debt owed, or what's called "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, ensure or necessarily stop creditors from pursuing other legal means to recapture 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 up to seven years -- thus having less severe an impact on credit as bankruptcy which will typically remain on a credit report for ten years.
Debt Consolidation Loans
Debt consolidation loans allow consumers with unmanageable 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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