Non-profit credit counseling is often recommended to people as a way to get out of debt without spending a lot of money or ruining their credit score. With non-profit counseling, the organization who is providing credit services is not taking a profit from their services.
In some cases, non-profits will offer their services completely free of charge, but many of them charge a nominal fee to cover a portion of their costs. Non-profits will usually get most of their operating funds from government grants and private donations. Anyone who is making the decision whether or not to go through credit counseling needs to be aware of the advantages and disadvantages to this type of debt relief.
Credit counseling can be a great way to get back in control of your finances.
Of course, it is important for you to understand that credit counseling is a very involved process that can take hours of your time. Like any process, understanding how credit counseling works is critical to having a good experience with the service.
During credit counseling, you and a professional credit counselor will work together to identify the problems that got your finances out of control. Counseling will also help you to work on a series of budgets that will get you out of debt and on the road to saving for major and minor goals. A session will usually start with you bringing all of your current bills and income statements to the counselor. The counselor uses this information to put together your financial portrait. Together, you and counselor are then able to work on a budget and a plan for getting and staying out of debt.
There are several advantages to credit counseling.
To start with, people who go through the entire credit counseling process have a much smaller chance of having to go through credit counseling again in the future. Before the recent changes in bankruptcy law, people who went through credit counseling also had a much smaller chance of winding up in bankruptcy court. This is no longer the case because the changes in bankruptcy law require everyone filing bankruptcy to attend credit counseling.
In addition, people who go through credit counseling report that they are able to manage their money much more effectively after exiting the program. The effects of going through one of these programs have been shown to even affect the lives of participants’ children. After going through this process, people are able to budget more effectively as well as save for emergencies and other life events.
Of course, there are a few disadvantages to going through credit counseling with a non-profit organization. To start, many people have reported long waiting lists to get into the best programs. As state and local governments have cut their budgets, many of these programs have had to cut back on the number of people they can help or close their doors completely. If you need immediate help, non-profit credit counseling may not be your best option.
After getting accepted into a program, expect it to take weeks or even months to get your finances straightened out. Credit counselors will want you to adjust your budget in order to find money that can be used to pay off your debt. While this a financially sound approach, some people can become frustrated at working for months to pay off a debt only to find out that they haven’t made as much progress as they thought they would.
Finally, there are just some people who may not be able to be helped by credit counseling.
If you cannot cut any expenses and you do not have the income to cover your minimum payments, there is not that much help that a credit counselor can provide. Some situations are just too bad for credit counseling to help.
If you’re thinking about non-profit credit counseling to help you get out of debt, be sure to carefully consider the advantages and disadvantages of the process. It may be a better option for you to consider debt settlement instead of credit counseling.
Debt settlement can help you to eliminate your debts by having a professional negotiate directly with your creditors. In many cases, this method can help you to get a lower interest rate and even see your total loan balance reduced. For more information on this service, fill out the form below.