How Does Consumer Credit Counseling Work?

This information going to discuss the advantages of doing a Consumer Credit Counseling program. You may have heard of debt consoladation referred to as Consumer Credit Counseling, CCCS or debt management. To clear up the confusion, they are pretty much the same thing. Doing a debt management program is much different than doing a debt settlement program. In debt settlement you are negotiating down the amount of principal to pay back and debt consoladation you are negotiating the interest rates. In consumer credit counseling you will pay all of the principal plus interest. Debt negotiation will save you a lot of money in the principal but your credit score will get wrecked during the process. In debt negotiation you will pay back less than you originally borrowed. As you can imagine your creditors do not like that too much.

A debt consolidation program will give you one payment to manage each month.

A debt consolidation program will have you manage just one payment a month versus a payment for every one of your creditors. The credit counseling company will make all of your payments to the creditors. You just need to make sure to pay your CCCS company every month. Once you start to pay late the credit card company can increase your interest rates. There is a provision in your credit card contract called the universal default rate that allows them to do this. Some credit card companies can raise your rates because you where late on another companies credit card as well. Being late on another card can allow them to raise your interest rates on a credit card that wasn’t even late.

What are the benefits of credit counseling?

Another benefit of doing debt consolidation is the reduction or elimination of over the limit fees and late charges. When you are late or default on a loan, the late charges do not stop adding up. Not only will you keep racking up interest owed on the original debt, but you will also being racking up new interest owed on the late and over the limit fees as well. If that is not a vicious circle, I do not know what is.

A debt consolidation program will lower your interest rates on your credit cards.

Your interest rates will also be lowered when you sign up for a credit consolidation program. Your creditors may not work with you in lowering your rates before enrolling in a program, but once you enroll in a credit counseling program they must lower your interest rates. It is the law. Sometimes they can negotiate your interest rates to 0%.

A good debt consolidation company can prepare a budget for you to live by. They can help you develop healthy financial habits so you never have to sign up for a debt management program again.

What do I do if I can’t afford the payment from the credit counseling company?

If you cannot afford the payments of a debt consolidation company, you may want to consider doing a debt negotiation program. A debt negotiation program can cut your balances as much as 60% of what you owe. There is no long term negative effect on your credit when you do a debt negotiation program. Go to DebtNegotiationZone.com for more information on how to get a free no hassle debt review.

This information is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser or attorney.

For a no hassle debt review please call toll free 1-888-368-6668 or visit DebtNegotiationZone.com