Types of Credit Counseling Agencies
Ever heard of a credit counseling? You are considering consolidating your debt and tightening your spending since the recession hit the world economy. There are so many options to resolve any debt problems you may find yourself having a bankruptcy, consolidation loan, Debt settlement and credit counseling. They all have merit, just make sure to do proper research before you make a decision about the right choice for you, although my personal preference is credit counseling.
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- Debt Consolidation
Debt Consolidation is different from credit counseling in this case requires homeowners to take out a second mortgage using the equity in their homes as collateral. You could then pay off any debt or unsecured loans, and paying debts in one monthly payment. While this might seem a good solution, consider the fact you have used the equity in your home to pay off unsecured debt. By placing unsecured debt for your home loan, you pay more effective in the long run as the term of your home loan may be 20 years or more.
Something else to think about is your home now to guarantee a second mortgage (and your unsecured debt). If you default on second mortgage loans may confiscate your home. Is this what you want? Think carefully before putting your home at risk to pay off unsecured debt, and consider credit counseling.
- Debt Settlement
Also differ from debt settlement and credit counseling is the process of negotiating a lower amount than owed to clear the debt. Most creditors will not take you seriously unless the debt settlement company to do this on your behalf. The goal of debt settlement is to negotiate a lump sum payment which can reduce your debt by up to 50% on average.
This may not be an option if the majority of your debt on your credit card. Credit card companies do not like this form of debt settlement and are likely to initiate other forms of debt recovery for an incredible amount. But if worst comes to worst, credit card lenders prefer to get something than nothing, and the debt settlement company may be able to negotiate a solution for you. If you think of bankruptcy as an option then debt settlement may be an option for you is worth exploring, or credit counseling probably will suit you better.
- Credit Counseling
Credit counseling gives you the chance to take a long hard look at your finances. Providing credit counseling advice and help when negotiating with your creditors. Sometimes credit counseling can even negotiate a lower interest rate for you through their connections in the financial industry.
There are two types of credit counseling agencies. Nonprofit credit counseling that charge based on your debt and ability to repay it. Then there are credit counseling agencies for the benefit of the account setup fees and ongoing monthly fees until your debt is completely resolved.
Whatever you do, make sure you research all the options available credit counseling before you commit yourself to any payment plan to pay off all your debts. If you do your research and work with a debt settlement or credit counseling firm closely, there’s no reason you will not be able to get out of debt as quickly as possible.
Debbie White is a contributing writer http://www.curadebt.com and is currently writing some special articles to guide businesses on how to manage debt and avoid bankruptcy. For Credit Counseling and Debt Help Consultation,