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Credit Counseling – What Is It?

by Lizzy Bale on January 20, 2012

The truth of the matter is there are just too many terms to remember when it comes to debt management. Debt consolidation, debt counseling, credit scores, and debt settlement are all different rungs on a very tightly packed industry. We’re here to help.

Credit Counseling

can credit counseling helpOne such term, credit counseling, refers to the act of receiving guidance as it relates to your credit and debt. It is something that should be done by a Certified Credit Counselor. This usually means having a budget counseling session, which lasts anywhere between 45 minutes and an hour. During that time, your Counselor will look at your finances and figure out what needs to be done to put you back on solid financial footing. If it turns out that you are suffering from a serious debt, you may qualify for a Debt Repayment plan with your existing creditors (aka a debt consolidation program). If that’s the case, you’ll have the chance to close all your accounts you want to include on the plan and make one set payment throughout the term of the program.

Consumer credit counseling may involve a debt management plan or DMP. This means you will have a set repayment schedule that will be handled by the CCCS. You will make one payment to the credit counseling company and they will distribute that money to your creditors. The creditors will provide a fee to the CCCS for getting you back on a regular payment plan.

You may also be forced into a credit counseling service as a per-requisite for filing bankruptcy. You can thank the credit card banks for the changes in the bankruptcy laws that requires this.

Many people believe debt consolidation and credit counseling are one in the same but there are many key differences. You can compare credit counseling and debt consolidation to check out the pros and cons of each.

You can get credit counseling services in your city locally from New York to Florida to Texas and California – all over the US. The National Foundation for Credit Counseling can provide you with a local reference for CCCS. Or for faster service you can get an online consumer credit counseling service.

It’s important to note that not everyone qualifies for a Debt Consolidation┬áplan.

If your current interest rates are below 10%, it’s likely that you won’t have enough of an interest rate reduction to justify the paying the fees associated with a plan. Whether or not that’s the case is something you can easily figure out by filling out a form on our site. A certified credit counselor will contact you within 24 hours to speak with you.

For some consumers, a credit counseling program does make financial sense. It provides a way to get a handle on your bills – allowing you more time to pay what you owe to your creditors. You will pay most of what you owe plus the interest charges.

If you want an alternative to consumer credit counseling then you should learn about consolidating your debts with a debt negotiation program recommended by Debt Consolidation USA.