Debt relief:

Find that you’re just not making progress on your debt, no matter how hard you try? If that’s the case, you might be facing overwhelming debt.

Debt relief and vs credit counselling

Look into your debt relief options to break free of this financial burden. These tools can change the terms or amount of your debt so you can get back on your feet more quickly. But debt-relief programs are not the right solution for everyone, and it’s important to

2 ways When you should seek debt relief

Consider bankruptcy, debt management or debt settlement when either of these is true:

  • You have no hope of repaying unsecured debt (credit cards, medical bills, personal loans) within five years, even if you take extreme measures to cut spending.
  • The total of your unpaid unsecured debt equals half or more of your gross income.

On the other hand, if you could potentially repay your unsecured debts within five years consider a do-it-yourself plan. That could include a combination of debt consolidation, appeals to creditors and stricter budgeting.

what is better credit counseling or debt settlement

The debt relief industry includes scammers who are eager to take what little money you have. Many people who enter debt relief programs fail to complete them. You could end up with debts that are even bigger than when you started.

But debt relief may give you the new start or the breathing room you need to finally make real progress.

Be sure you understand — and verify — these points before entering any agreement:

1. What you need to qualify.

2.What fees you will pay.

3.Which creditors are being paid, and how much; if your debt is in collections, make sure you understand who owns the debt so payments go to the right agency.

4,The tax implications.

What Is Credit Counseling and Debt relief and vs credit counselling?

Credit counseling is a free service that provides help with budgeting, solutions for becoming debt-free, and tips for managing your money successfully.

Credit counseling is offered by nonprofit agencies and is sometimes called debt counseling. It involves a 30-minute interview with a certified counselor who gathers information about your financial situation to develop a plan that helps you regain control of your finances.

The plan may include a debt management program that nonprofit agencies like InCharge Debt Solutions offer to pay off credit card debt. Credit counseling also includes looking at your credit report to verify all accounts and educational materials to map out your financial future.

Credit counseling aims to provide a solution that helps you achieve debt relief and get on a financially healthy path.

The service is free and can be done over the phone or online. Credit counseling does not directly impact your credit score, but if the advice provided helps pay down your debt with on-time payments, it can lead to an improved score.

During a counseling session, you’ll be provided the following 4 review:

  • Budget Review – A counselor helps you create a budget that includes personalized suggestions on cutting expenses
  • Debt Analysis – A review of the debt accounts in your credit report
  • Recommendations – An action plan with recommended debt solutions and alternatives available to you.

The action plan is only a suggestion. Credit counselors give you an understanding of your financial situation and empower you to take action if needed.

A study on credit counseling by researchers at Ohio State University found that those who received counseling reduced credit card debt by nearly $6,000 in the first 18 months. That’s compared to a $3,600 reduction by those who did not receive counseling. About 70% of the 12,000 participants said credit counseling improved their financial confidence.

“People in a crisis situation are looking for partners they can trust and that’s what a good credit counseling agency should provide,” Rebecca Steele, CEO of the National Foundation for Credit Counseling (NFCC) said. “We are going to spend time with the consumer going over their income, the stability of their income, understanding their budget needs and teaching them how to save money for those rainy-day situations. That’s the real value of a credit counseling agency.”

Benefits of Credit Counseling

Credit counseling is an effective method for establishing a budget and tackling debt, but the benefits don’t end there.

  • Credit counseling optimizes your budget and provides the tools to make informed decisions about credit. Becoming a knowledgeable borrower and savvy credit user will improve your credit score over time.
  • Credit counseling can help strategize how to pay off predatory payday loans. These loans offer excessive interest rates that can trap you in years of debt.
  • Credit counseling can help stop aggressive phone calls from debt collectors if you end up enrolled in a debt management program. This can offer peace of mind and allow you to focus on paying off your debt without distractive badgering from creditors.
  • Credit counseling can stop wage garnishments from dwindling your paycheck. As long as you’re participating in a debt management program (and paying on time), debt collectors are unable to garnish your wages.

Credit Counseling Services

Nonprofit agencies offer additional services to debt counseling, but credit counseling starts with the question-and-answer session.  Depending on the counselor’s recommendation, you might also take advantage of one of the following solutions:

1.Debt Management Plan

2.Bankruptcy Counseling

3.Housing and Education Counseling

4.Student Loan Counseling