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“Debt Consolidation”
Do You Know the Facts?

...Continued From Previous Page

Debt Consolidation Through
Consumer Credit Counseling

For many consumers experiencing financial hardship, enrollment in a nonprofit Consumer Credit Counseling Agency's debt management program may be their best option for debt relief. A debt management program, however, is not for just anyone. First of all, a lot depends on who the creditors are. Credit counseling agencies primarily negotiate unsecured debt, such as credit cards, installment loans, retail finance plans, medical bills and personal debts. Second, contrary to popular belief, credit counseling agencies cannot force creditors to accept their proposals. Although most creditors will work with these agencies to effect a workable solution, many creditors have minimum payments (based on the outstanding balance) that they will accept. Therefore, an applicant needs to have sufficient income to support the revised lower payment, as well as enough income left for basic living expenses.

How Debt Consolidation Through a
Credit Counseling Agency Works.

Most creditors offer special repayment plans to their customers who undergo financial hardship and enroll in a nonprofit consumer credit counseling agency's debt management program. Upon enrollment, creditors are then informed that their customer has entered a debt management program and are asked that they reduce the client's monthly payment, reduce or stop interest, stop late fees and overlimit charges, and to re-age past due accounts to bring them current. Because most creditors support the agency, these special repayment plans are usually accepted.

In the typical scenario, enrollment in the program will reduce the consumer's overall monthly debt service 15% to 40% and reduce the average interest rate significantly. In addition, once enrolled, correspondence from creditors regarding past due accounts are directed to the agency. In other words, in addition to the above benefits, the program puts an end to upsetting collection calls and, financially speaking, offers the consumer a new lease on life.

Unlike a lender providing a “debt consolidation loan,” when consumers consolidate their debt through a nonprofit credit counseling agency, the agency does not then become the creditor. In this regard, the agency is, in essence, a conduit for disbursing payments to their client's creditors. While the consumer's original creditor(s) retain all legal rights and may take legal action should the consumer default on the negotiated payment, the agency itself has no such rights, and in fact, has no interest in or desire to take legal action. Contrary, the agency works “on behalf of their clients” to prevent such problems from occurring.

The only way to determine if debt consolidation through a Consumer Credit Counseling Agency would benefit a consumer is by analyzing the consumer's current financial profile. If qualified, applicants may elect to enroll in the debt management program offered by the agency.

In summary, if you have been considering debt consolidation or are currently experiencing financial hardship, it is important that you weigh all of your options. We hope that this article has provided you a great deal of insight in this regard. If you are unsure which path to take, we invite you to fully explore our web site. You will discover a wealth of information relating to debt management. We happen to agree with one of our visitors, who remarked, “Your site is an oasis in a financial desert.” We are proud of what we have achieved through the past 20 years and dedicated to serving our visitors.

If you have concluded that one of the options outlined above is right for you, perhaps it's time to act now! Regardless of which option you elect, you may apply online right now. Simply check out the various resources displayed on this page and throughout our website. There is no cost to apply and in most cases, you will know within hours if you are approved.

 


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