Consumer Credit Counseling Services

When an individual has reached a financial position where he can no longer meet his monthly obligations decisive action must be taken. While many people today are turning toward personal bankruptcy this may not be the best alternative. It would be in an individual's best interest to at least consider contacting a consumer credit counseling service.

Click Here for a Free Debt Consolidation Quote!
Reduce Your Credit Card Debt by up to 60%!

The primary role of a consumer credit counseling service is to negotiate with creditors to obtain some financial relief for their clients. This entails convincing creditors to eliminate late fees, lower interest rates, extend the term of your loan, or re-categorize past due debt as current debt. Most of consumer credit counseling services are non profit organizations. Once the negotiations are complete the individual would make one payment to the consumer credit counseling service and the service would forward payment to the creditors. The reputable counseling services receive their payment directly from the creditors in the form of commission off of money that is collected. Although the services that these organizations provide can be done by a private individual they generally can not be done more effectively.

Selecting the Right Consumer Credit Counseling Service

If a person decides they want to use a consumer credit counseling service then the key issue becomes selecting a reputable organization. Although there are many legitimate businesses within the industry that look out for the best interest of their clients there are also a number of discreditable organizations. Here are a few red flags to look for while shopping for the best service.

Credit Counseling Criteria

Does the first months payment go towards the debt or is it used as payment toward the company.

Is the company listed in a prominent national consumer credit counseling organization? (i.e. The NFCC or AICCCA) These organizations have strict guidelines before they award membership.

Are there any fees that are attached? Simply put, stay away from fees. They more of your money that go towards fees the less that goes toward your debt.

Going through a consumer credit counseling service is not the right move for everyone. It is important to keep in mind that using such a service will generally be reflected negatively on a credit report. However, it does not reflect nearly as poorly as a bankruptcy. If you decide that that a counseling service will fit your needs than take the time to carefully select a company that has a proven reputation.

~~~~~~~~~
About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.