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Credit Counseling Agency – Preliminary Consultation
It is easy to run up credit card debt during times of financial pressure. Car repair, dental work, medical bills, replacing the roof, or a myriad of other emergencies demands your immediate attention.
Sure, it is much better to have savings and emergency funds; however, according to the Federal Reserve Report on the Economic Well-Being of U.S. Households in 2015 (published May 2016):
Nearly half of adults are ill-prepared for a financial disruption and would struggle to cover emergency expenses should they arise;
If you are struggling with your debt and want to protect your credit, then a credit counseling agency can help organize your financial house. A reputable agency will provide a free consultation that reviews your budget, credit, and analyzes your financial capabilities to service your debt. If they feel that you are a good candidate, then the credit counseling agency will recommend a Debt Management Program (DMP).
No matter which solution you choose, a thorough financial examination will aid you in choosing the best debt relief program for your particular situation.
Credit Counseling Agency - Debt Management Plan Recommendation
Credit Counseling Agencies generally work with a Debt Management Program (DMP), which consolidates your credit card bills into one monthly payment. The DMP negotiates lower rates with the credit card companies and set up a payoff schedule that lasts about five years.
If you have good-to-excellent credit, then a personal debt consolidation loan might be the better option. It is important to compare interest rates and fees (monthly for the DMP and upfront fees for the personal loan).
A Credit Counseling Agency generally provides free (or perhaps a limited fee) first consultation and educational services. However, since they generally are looking to enroll consumers in their DMP, it is important to compare your various debt relief options.
Credit Counseling Agency – Find A Reputable Company
Credit Counseling agencies are a good source of help for many people looking to understand their financial situation and get out of credit card debt. Unless your financial situation is strong, there are no easy fixes. Use your free consultation to understand your debt relief options.
Many credit counseling agencies boast that they are non-profit. Although that may sound like a big advantage, it is very important to check and make sure that the agency is a reputable firm.
Here are a few ways to check:
- Accredited: There are two major accreditation, the Financial Counseling Association of America (FCAA), formerly AICCC, and the National Foundation for Credit Counseling (NFCC).
- Dept. of Justice: Check out the Dept. of Justice Website for accredited agencies
- BBB: Review the company's ratings and reviews. Also, check with their scam tracker.
- Fees: Make that you are not paying an upfront fee. The DMP has a setup fee (about $40) and a monthly fee of about $25-$75.
- Counselor accreditation: Credit counseling agencies hire counselors. Ask them regarding their accreditation.
Find a Debt Relief Option that Fits your Situation
Get a no-cost, no obligation analysis of your debt options from a pre-screened debt consolidation company.
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q3 2023 was $17.291 trillion. Student loan debt was $1.599 trillion and credit card debt was $1.079 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Louisiana, 16% have student loan debt. Of those holding student loan debt, 10% are in default. Auto/retail loan delinquency rate is 7%.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.