Debt Counseling Solutions

-- Select Service -- Credit Card Consolidation Consolidate Multiple Debt Types Tax Relief Credit Repair

Debt Consolidation

Some for-profit debt counseling agencies will offer debt consolidation services. In debt consolidation, the agency arranges more ideal interest rates and terms with your creditors to make repayment easier for you. Your debts are then bundled into a single payment that you make to the debt consolidation company monthly. When the funds are received, the counseling agency will distribute the money among your creditors, so your bills always get paid on time. Here are some of the pros and cons of debt consolidation:

• Enjoy the simplicity of having just one monthly payment. You still pay all of your bills, but you do so with one easy payment instead of many.
• Get more reasonable interest rates. Debt counselors can often obtain more reasonable interest rates for their clients by negotiating with their creditors.
• May help get you out of debt more quickly. Better interest rates can help you pay off your balances faster.
• High attrition rates. Debt consolidation programs have very high drop-out rates.
• Possible negative impact on your credit. Some lenders frown upon consumers who participate in a consolidation program with a debt counseling agency.

Credit Repair

Debt counseling agencies may also offer credit repair services as a supplement to their standard debt interventions. Credit repair is not a debt solution, but rather a strategy consumers can employ to clean up their credit reports from the damage debt has done. Debt counselors who perform credit repair will work with you to dispute questionable negative items on your credit report with the goal of getting them removed. The pros and cons of credit repair are summarized below.

• Remove damaging mistakes from your report. Most credit reports contain mistakes, and your debt counseling service can help you find and remove these errors.
• Make your credit report as accurate and positive as possible.
• Negative items that are accurate cannot be removed. If a derogatory item on your credit report is true, no credit repair service will be able to remove it.
• Credit repair can be expensive. Credit repair tends to cost more than basic debt counseling services.

Budgeting & Money Management

Any debt counseling agency worth its salt will offer budgeting and money management advice in conjunction with their standard debt interventions. Remember that no matter how effective your debt counselor is, the improvements you make to your debt situation will not last unless you understand how to manage your money and budget properly. Commonly, consumers fell into debt in the first place because they lack the requisite knowledge and skills to budget and save. To avoid falling into debt again, seek out a debt counselor who can assist you with financial planning and management.