Debt Secrets Credit Counseling Companies

Debt secrets credit counseling companies

The majority of people don't know, but actually a terrible or obscure obligation decrease organization can really put you in a worse financial position than you at first. In many cases, bankruptcy is preferred over working with a loan advisor company. Given the amount of confusing information, it is very important to clarify the facts about these companies.

WARNING: Credit counseling is not always the case

At first start checking all your debts with a consultant. You are connected with each of your creditors to reduce interest rates which reduce your payments. Together we develop a tight budget. You stick to the budget by asking for a one-time payment from you, which you then use to pay bills on your behalf.

Unfortunately, this sun scenario hides true truth. Yes, for a certain fee, the credit counselor asks the credit card company to reduce interest rates, but you can do it yourself. Yes, for a certain fee, they help you make a budget, but you can do it yourself. Yes, at a cost they take large payments from you every month and use it to pay part of their bills, but you can do it yourself. In fact, you can do better.

If you owe, the last thing you need is a credit counseling agency that charges you a high monthly fee for doing tasks that you can do for free. If not, any savings from low interest rates will quickly disappear in the new fees for your credit advisor. Does that sound like good financial advice?

Guided by customer success or personal benefits?

Several years ago, a small number of newly formed credit counselors really had a positive impact on the lives of their clients. Before the industry exploded, many credit card companies considered professional credit advisors as a step in the right direction. Creditors tend to reduce interest rates and make other compromises to help clients get back on track.

No more Unfortunately, the existing consulting companies insist on making profits for their owners rather than helping clients settle their debts. In fact, some debt reduction companies are not designed to help consumers manage their debt. Instead, they function as a front for bankruptcy attorneys or mortgage brokers.

Don't be fooled if you believe that a non-profit advisor is better than a business advisor. Recent federal investigations show that many of these charities are actually owned by the same people who have "non-profit" competitors.

The credit advice industry is not regulated, meaning that there are no core standards that companies must adhere to. As soon as the shadow credit service opens their door, the credit card company closes their door. In fact, today is more difficult than before to reduce credit card interest rates. Credit counselors, not credit card users, are responsible for this situation.

All of this contributes to ... higher bills

Certain debt consolidation companies have specific instructions about what their customers are and what is not. For example, in some companies you will not be able to open a new credit account under any circumstances. If the family car finally collapses, you may not be allowed to get a new vehicle. The average debt relief plan lasts at least three years - that's at least three years of your life where all foreigners limit your costs.

Whether you can get a new car loan or it might not worry you most after hiring a credit counseling agent. Consider how essential it's to pay your credit card bills on time. Repeated late payments damage your credit worthiness, which means a higher interest rate for future mortgages or student loans. What guarantee do you have that your consultant will record your appointment? Many of these companies are suspended a few months late. Their innocent customers never know until it's too late.

Then there are simple math questions. Strangely, the monthly payments that you make to your credit advisor may not even cover all of your minimum payments. After the advisers withdraw their heavy bills themselves, they pay their bills at their own discretion. Some cards may not be paid for months because most of your money is on a different card.

At best, this means lower credit ratings and some late fees. In the worst case, this will mean legal action against you and a credit rating that is worse than the original. Instead, it will be faster, easier, and much cheaper.

Dealing with debt can be tiring, but changing important aspects of our lives into people we don't know is a big risk. It's good to get outside help, but not when you pay hundreds or even thousands of dollars to spend on your current balance.

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