Credit counseling is also called debt counseling. Debt counseling helps the lenders to understand, the amount of debt that they can afford to have. Generally when you talk to people about debt, they think it is something that they deserve, due to the mistakes that they have made while taking financial decisions. But no one is perfect and all they need is someone who can point them to right direction and also motivate to take that direction. This is what debt counseling is all about. Debt counseling can help you in gathering the education that you need to get rid of the debts that you have accumulated over period of time.
Overview of Credit Counseling
What debt counseling actually does is that it establishes a debt management plan, so as to negotiate with creditors for clients. This plan focusses on finding a way with creditors to convince them on a repayment plan which is less complicated and helps in payback of debt. This plan may include systematic payments at reduced interest rates and also their counseling fee. They also ensure in the process of this plan that the clients never face the debt problems in the future.
Benefits of Debt Counseling
· After you join a debt management plan, all the accounts of the client with creditors are closed, thus stopping any new charges being added to those accounts.
· The payments clients need to make after joining the plan are lower than the usual payments they were making. This reduction in payment amount is generally 10-20% lower, but in certain cases it can be 30% also.
· One more advantage is that client is subjected to a lower interest rate. After joining the debt management plan, this reduction in interest rate can be up to one third of original interest rate.
· This reduction in payment amount and interest rate can help the clients in clearing their debt early.
This is why debt counseling agencies can help several people in achieving financial freedom. But these agencies can also help in bill consolidation.
What bill consolidation basically does, is that all the outstanding debts and loans of the client that are consolidated into one bill. By this consolidation it becomes manageable for the client to convert all the debts and interest payments into affordable monthly payments. By this you can understand that bill consolidation, actually helps the client in lowering the interest rates and in turn helping in the achievement of financial freedom.
Choosing a Debt Counseling Agency
Always be cautious while choosing a debt counseling firm. You should verify whether they can handle all your payments and also check that you are getting best interest rate before signing any debt management plan. Consult several agencies before choosing one, you can also negotiate for better payments. While discussing all these financial matters you must check whether there are any hidden charges that can be applied on you later. Also, remember that bill consolidation is like debt management plans and you can opt for monthly payments.
Credit counseling can be very helpful for you in taking a wise decision regarding your bill consolidation and debt management plan. Debt counseling can help you clear your debts earlier and faster.
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