Credit Card Counseling: Pull in the Reins on Debt
Martin Tan
Changes in the economy have left consumers unable to make the minimum payments on credit card debts. The inability to pay these debts forces consumers into a spiraling debt cycle that impacts their lifestyles. Avoid bankruptcy and foreclosure when debt becomes unmanageable by taking action to prevent the cycle from spiraling upward.
The escalated debts can be returned to a manageable level with the assistance of Credit card counseling services and nonprofit debt consolidation companies. These companies can help eliminate debts and rebuild credit ratings within a reasonable time.
Creditors will be handled by professional credit counselors to establish a repayment plan that will lower payments, stop fees and charges from accruing, eliminate harassing phone calls and letters, reduce the debt by up to 70 percent, and lower interest rates significantly. The services bring overwhelming debts back to manageable levels.
By making a single monthly payment to your credit card counseling company, the company will then in turn disperse regular payments to each of your creditors. You will receive a monthly statement from your debt consolidation company detailing what bills they have paid and when, and your monthly statements will still come from your creditors, allowing you to see that your debt is being reduced.
Interest rates on credit cards average between 22 and 39 percent. A minimum monthly payment can leave you paying interest payments for 30 years or more. A credit card counseling or a nonprofit debt consolidation program negotiates with the creditor to reduce the interest rates and eliminate the fees associated with the debt. Creditors receive payments on time and your credit score improves as the payment history improves.
It is important of course to do your research and read all of the fine print about any program before you commit to any debt consolidation company. Unscrupulous business practices are unfortunately a fact of life and you don't want to send money to a company who doesn't do what they promised.
An upfront fee schedule should be requested and should reflect the amount being paid to the company and creditors before committing and making payments. This fee schedule will help you to determine which credit card counseling company will provide the best option and services.
An agreement with a respected credit card counseling service or nonprofit debt consolidation company can lead to reducing and eliminating debt, improving credit scores, and decreasing stress. The debts did not grow overnight and will not disappear overnight. Regular monthly payments to your credit card counselor and establishing a consistent payment history improve your credit rating and will soon reflect your efforts. The spiral of debt will reverse and debts will return to the manageable levels you started with.
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