About Counseling Credit Services

Introduction

Credit counseling services provide assistance and even a lifeline to people who are suffering from unmanageable debt problems. There will always be a need for this type of assistance, but it is especially needed during times when the entire economy is in a recession. Although it is recommended that everyone have a emergency supply of funds to last them for at least six months, most people are not able to save even close to that kind of money before a crisis hits. Current financial trouble could be the result of a series of financially damaging occurrences that could drag on for months or even years, or a financial crisis could be the result of one catastrophic event. Whatever the cause, the bottom line is you need help choosing the right credit counseling services could get you back on financial track.

In 1951, the first credit counseling service, The National Foundation for Credit Counseling, or NFCC, was created. The goal of this foundation was to educate the average consumer about how to best handle their finances so they could avoid bankruptcy. Since then other credit counseling services were established in these services became more actively involved with it behave as mediators between consumers and their creditors. There are currently about 300 credit counseling services and that number is down from when that was over 1007 years ago. although the actual number is lower that use of these services is probably higher than it has ever been. Especially, since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 came into effect. This act requires that all consumers must complete a credit program with a nonprofit credit counseling service before they can file for bankruptcy. They also had to complete a credit counseling education program after they file for bankruptcy.

 

Features

Consumers who need the services of credit counseling services should make sure they choose only nonprofit companies because the fees for these companies will be much lower. When a consumer first gets in touch with one of these agencies they will be asked to complete a form with their contact information and also with all of their debt information including a lot of things they may not even consider such as the cost of day-to-day living. This means that in addition to their various debts, they will also be expected to fill out a form that list how much they pay for rent and mortgage how much they pay for transportation how much they pay for electricity and telephone and cable, and more.

The reason why they are expected to list their expenses down to the penny is because then credit counseling services will try to negotiate with each of the consumers creditors to work out a manageable monthly payment schedule. What this means is that once the credit counseling service takes over consumers will no longer make payments their various creditors, instead they will make payments directly to the credit counseling service. After the final details are worked out and there is a manageable monthly amount that's to be paid consumers are expected to pay that each month and they are given a timetable of when they should be out of their current debt. One key to the success of this program is that the the monthly payments that consumers start with should be same throughout the program. In other words, if they start paying $500 a month spread out over five creditors, as they pay off each creditor more of that $500 will be allocated to the remaining creditors until their debt is paid in full.

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