Do Not Attempt Credit Counseling Before You Read This!

Author : Jimmy Jamm

According to the American Bankruptcy Institute, the number of bankruptcies filed in the US has skyrocketed astronomically. This is of course due to a variety of reasons, the main one being the current state of the economy. Massive layoffs, bank failings and factory closures have affected thousands of workers and their immediate families who have had to adjust to loss of income. Bankruptcies have escalated because individuals and families are no longer able to meet their financial obligations with their existing income. Before walking down the path of bankruptcy, one needs to consider a few things very carefully. This is because bankruptcies can severely damage one's credit.

Do not be ignorant concerning credit counseling

Sometimes, one finds themselves unable to successfully meet their debt obligations and in so doing they fall behind. Debt or credit counseling, becomes the process whereby a debtor signs up with a credit counseling firm which in turn renegotiates their debts with their creditors by formulating a debt management plan. The plan allows creditors to see that the debtor is serious about repaying their debts.

The debt management plan involves the debtor writing down all their debts and if possible the contact information for the creditors. This allows the credit counseling firm to contact those creditors and renegotiate a settlement. This involves rearranging the monthly payments, interest and all the fees that are owed.

Agencies responsible

There are numerous debt counselling providers in the market today and sometimes this creates confusion for the debtor. Some are credible while others may be fraudulent. The reason it is recommended that one exercise caution is because some of these unscrupulous firms target desperate unsuspecting debtors.

How can you tell honest credit counselors?

This is a good question. As we mentioned, there are numerous organizations and providers out there claiming to perform debt renegotiation services. Many of these are reputable. Quite a few are not. Let us examine a few points that can help you determine which firms are worth contacting:

1. Does the firm immediately ask for cash upfront?
Any firm that starts by asking for you to whip out your credit card and pay and upfront fee in order to gain more information should be promptly ignored. Most reputable providers will have a wealth of information for free before they even discuss any money. Also, most firms will collect simple information at the front and a representative from the firm will contact you and discuss your situation further. Avoid firms that are money-hungry.

2. Does the firm have an 800-number?
You should avoid firms that have no option to contact a live person. This is because in the debt counseling business, it is essential that you work with someone one-on-one.

3. Finally, does the company have a good reputation?
This is easy to check. You can simply visit the website for the Better Business Bureau and see whether there are any registered complaints against the company. This is also something you can Google and see whether there are people with a negative experience.

Looking for information on good credit counseling providers? Then check out this complete guide to the best credit counseling information.

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