Will Credit Counseling Help You?
Many individuals in Massachusetts and across the nation over their heads in debt, struggling and needing relief from credit cards and other unsecured debts, such as store cards, gas cards, medical bills, personal signature loans, etc. If you're in debt, you may be seriously considering credit counseling, or any of a number of alternative debt relief options, including bankruptcy. In fact, in the case of bankruptcy, it is now required by law that you go through credit counseling before filing for bankruptcy.
The objective of any consumer credit counseling program is really two-fold 1) To educate consumers on budgeting, credit, and debt managment and, when appropriate 2) To help the consumer "consolidate," or combine, the entire amount of a consumer's credit cards and other unsecured debts into a single, more affordable and manageable monthly payment. Through the benefits of debt relief, such as lower interest rates and the waiving of late fees and penalties, a debt management plan (DMP) coordinated by a credit counselor or debt counselor can help consumers get out of debt faster than they could on their own if they continued to struggle with monthly minimums at a higher interest rate. Credit counseling programs, if followed faithfully, can not only simplify a consumer's finances, but also save significant amount of money and stress. Most of all, they can help build the mindset and discipline necessary to end the cycle of debt and put the consumer on a solid financial footing for a debt-free future.
If you are experiencing a financial hardship and need to explore your debt relief options, you can get your free debt relief evaluation and savings estimate at no obligation.
How Does Credit Counseling Work?
Certified credit counselors or debt counselors work with credit counseling agencies and provide a number of helpful debt relief services for individuals and families. Such services include assessing an individual's unique debt circumstances, budgeting, financial education, and in many cases, providing you with the tools to help manage your finances and move toward the dream of financial independence and a debt free future.
Debt Management Plans
Debtors working with credit counseling agencies will follow an established debt management plan, or DMP, to help provide debt relief. Debt Management Plans could provide debt relief by:
- Lowering monthly payments
- Reducing interest rates
- Waiving of late fees and penalties
- Consolidating or combining debts into a single, more manageable payment each month
- Helping individuals save substantial money and allowing you to get out of debt in less time than you could on your own if you didn't have the benefits of lower interest rates and continued to pay only monthly minimums
Could Debt Relief Help You? Get your free debt relief analysis and saving estimate.
Debt Relief Alternatives
Many Massachusetts residents have been helped by credit counseling. While it is a tried and true method of debt relief, debt management also requires basic financial discipline and restraint to avoid using credit cards. It normally takes three years or more to complete the program and realize the full benefits of debt relief.
On the other hand, debt settlement is an alternative to debt management. It is a more aggressive form of debt relief that could help you get out of credit card debt faster, assuming you can accumulate funds in a "set aside" account that can later be used to extend a settlement offer to creditors.
With debt settlement, credit card companies may agree to settle for a lesser amount rather than receive little or nothing from consumers in distress who may be looking to pay what they can to help avoid bankruptcy. The fact is, when a consumer falls 60-90 days or more behind in payments, credit card companies may choose to "sell off" the debt to a third party collector or collection agency as "bad debt," possibly for as little as 10 cents on the dollar. In this scenario it stands to reason that a credit card company might be willing to settle for considerably less than the full amount from a consumer who is facing a serious financial hardship and truly does need relief from high balance credit card debt.
With respect to settlement, it's important that consumers who don't live up to the terms of their cardholder agreement realize that, in doing, so, they are facing potential legal threats or action from credit card companies who want to discourage them from taking this course. In addition it's important for consumers to be aware that money saved through credit card settlements, which can be substantial, is subject to federal taxation. Finally, debt settlement typically will have a negative impact on personal credit, but not as serious or long lasting of an impact as personal bankruptcy.
While debt relief programs help many Americans during times of financial hardship, some people may also benefit from state-assisted programs and services to help them pay for utility bills, grocery bills, or childcare. Many of these services help low-income families and individuals pay for the basic essentials, regardless of their credit card debt situation. To learn more about these resources and more, go to the state's homepage Benefits section.
Free Debt Relief Estimate
To see what debt relief could do for you and how much money you could save, take a moment to answer a few basic questions so that we can locate a BBB-accredited debt relief provider who may assist you. Before you enroll in any debt relief program, it is important to clearly understand how much debt relief can potentially save, how long it will take to realize those savings, and the impact that any debt relief program might have on personal credit and taxes.
To find out what debt relief could do for you and get an estimate of how much you could save - take a moment to answer a few questions online. Get your free debt relief estimate and savings estimate today.