If you feel you cannot deal with
your debts and financial obligations, you may want to try debt counselling? In
this process, you will speak to a debt counsellor who will assess your income,
liabilities, spending habits and your monthly expenses. From there, he will
determine the mistakes you are making that make you incur such debts. He will
also formulate a budget plan for you so that you would become debt free
eventually. He will also determine if you need to enrol in a debt management
program or if you should file for bankruptcy. Here are tips you should get
about debt counselling.
When you speak to a debt counsellor, know what services you require. Aside from counselling, you may need education or debt negotiation or reduction. Debt counsellors provide education where they teach you how to manage your finances wisely while debt settlement agencies provide debt negotiation or reduction. The former will not affect your credit score but the latter will.
The debt counsellor you hire should be an approved agency of the state and is certified and highly trained. Stay away from sales persons posing as debt counsellors. Ask for any proof of their certification and training. If possible, the debt counselling agency must be of non-profit status and that it is considered a charity organization under the IRS’s code, particularly Section 501(c)(3). Make sure the agency is accredited with the BBB or Better Business Bureau or the NFCC or National Foundation for Credit Counselling. The BBB has all the agencies with excellent ratings as well as agencies with customer complaints.
Make sure the debt counsellor you choose will sincerely help you in getting out of debt without harming your credit rating or history. There are counsellors who would get payment from you and will never pay them to your creditors. Know how he plans to protect your credit score. Be wary, though, of counsellors that would immediately promise cleaning their clients’ credit history before knowing their financial situation because these are scammers.
Know how much you will be charged for debt counselling. The usual monthly payment is around $50 per hour. There are organizations that give out their first session for free. Avoid those with a complex menu of charges, fees and percentages. Also stay away from debt counsellors who tell you that they shall hold the payments you give and that you must refrain from paying your lenders and creditors by yourself. You can directly pay your creditors but you must not stop paying the monthly payment agreed upon in the sessions with the counsellor if you are qualified to enrol in a debt management program or DMP. A DMP is a program where you will give the agency one payment for them to distribute to your creditors.
Do not choose a debt counselling agency working for certain creditors such as credit card companies. Conflict of interest will come up and you will be compromised. Choose a counsellor who will work with you and for you and not for anybody else.
Follow these tips so that debt counselling shall work in your favour.
When you speak to a debt counsellor, know what services you require. Aside from counselling, you may need education or debt negotiation or reduction. Debt counsellors provide education where they teach you how to manage your finances wisely while debt settlement agencies provide debt negotiation or reduction. The former will not affect your credit score but the latter will.
The debt counsellor you hire should be an approved agency of the state and is certified and highly trained. Stay away from sales persons posing as debt counsellors. Ask for any proof of their certification and training. If possible, the debt counselling agency must be of non-profit status and that it is considered a charity organization under the IRS’s code, particularly Section 501(c)(3). Make sure the agency is accredited with the BBB or Better Business Bureau or the NFCC or National Foundation for Credit Counselling. The BBB has all the agencies with excellent ratings as well as agencies with customer complaints.
Make sure the debt counsellor you choose will sincerely help you in getting out of debt without harming your credit rating or history. There are counsellors who would get payment from you and will never pay them to your creditors. Know how he plans to protect your credit score. Be wary, though, of counsellors that would immediately promise cleaning their clients’ credit history before knowing their financial situation because these are scammers.
Know how much you will be charged for debt counselling. The usual monthly payment is around $50 per hour. There are organizations that give out their first session for free. Avoid those with a complex menu of charges, fees and percentages. Also stay away from debt counsellors who tell you that they shall hold the payments you give and that you must refrain from paying your lenders and creditors by yourself. You can directly pay your creditors but you must not stop paying the monthly payment agreed upon in the sessions with the counsellor if you are qualified to enrol in a debt management program or DMP. A DMP is a program where you will give the agency one payment for them to distribute to your creditors.
Do not choose a debt counselling agency working for certain creditors such as credit card companies. Conflict of interest will come up and you will be compromised. Choose a counsellor who will work with you and for you and not for anybody else.
Follow these tips so that debt counselling shall work in your favour.
Author: Christopher Steyn
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