So What Do Credit Counselors Do

Category: Finance, Credit.

In our lives we all make mistakes. All we can ask for is some support and some guidance.

But then it is also up to us to rectify those mistakes and start life afresh. When some of us are deep in debt those are the two things that we definitely need- guidance and support. So what do credit counselors do? And this is where credit counselors come in. Well they negotiate for you with the creditor. They can of course drag you to court for default in payment. When you are deep in debt and you have failed to make payments to your creditors for a few successive months, your creditor also becomes apprehensive.

But if you are really not in a position to pay back the loan with the interest, then there is hardly any gain for your creditor. The credit counselors try to find a middle path. You will have to declare that you are bankrupt but the creditor wouldn t gain anything out of that. They negotiate with your creditors so that the creditors relax the interest rates slightly so that it becomes easier for you to pay back. But why would the credit counselor help you? The creditors opt for this because they get their capital back with some interest and they don t have to go to the court and drag the matter on.

Of course he has his own benefits. This can vary from firm to firm but it should not be more than$ 20There are various clauses in the start up fees and you should read them properly before you select your counselor. First of all he will charge you a start up fee for the counseling process. Once you have enrolled in the project the credit counselor will collect money from you to pay to your creditors. Ideally, the credit counselor should first analyze and understand your credit situation, draw up a workable solution for you to get rid of your debts and then motivate you towards reaching your objective. You might also need to pay your counselor a monthly fee, but that is not compulsory for all states.

This is the primary responsibility of a good credit counselor. The credit counselor also gets anything from 3- 15% of what you pay from your creditor as collection fee. It is one thing to negotiate the interest rates, but to actually help you focus on the goals ahead and keep you on track is what separates an ordinary credit counselor from a good one.

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Unlike bankruptcy or debt settlement, you ll still be liable for paying the entire balance owed over a number of years, if you can, but as stated realistically commit to a long term payment arrangement, and you don t mind waiting a few extra years to become debt- free, consumer credit counseling may be right for you. Typically, credit counseling involves working with the counselors to work out a financial strategy to manage the debts.