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A Guide to Consumer Credit Counseling

Written by: John Mussi

When debt begins to build up uncontrollably, it may seem as
though the only way for you to get out of debt is to file
bankruptcy and deal with all of the negative repercussions that
come with it. Luckily, there is another option… in many cases
a service known as consumer credit counseling can help you to
avoid bankruptcy while eliminating your debt and getting you
back to where you need to be in regards to your credit.

A variety of consumer credit counseling services have come into
being within the past several years, and so long as they
continue to provide services that help individuals avoid
personal bankruptcy, it seems that there will be a need for
these services for some time to come.

What Is Consumer Credit Counseling?

Consumer credit counseling is a method for resolving the debts
of an individual without filing for bankruptcy, using a third
party to negotiate settlements with creditors and to assist in
budgeting money for debt repayment. Consumer credit counseling
services don’t issue loans or offer any sort of repayment
themselves; they simply help you to manage your money so that
you can repay your own debts, while at the same time working
with your creditors in an attempt to get them to reduce the
total amount that is owed. This allows you to pay a reduced
amount, while it allows your creditors to avoid the additional
expenses of collection attempts and possible court costs.

How Do Consumer Credit Counseling Services Work?

Consumer credit counseling services operate in two ways… they
are either non-profit organizations that operate off of
government grants, or they are for-profit organizations and
charge a nominal fee for their service. Regardless of how they
make money, the core of the service that is provided remains the
same; negotiation with creditors (many of whom they already have
contacts with) and assisting individuals in debt with their
budgeting and repayment. Depending upon the amount of money that
is owed, some people can get through the credit counseling
service rather quickly and have all of their debts reduced and
repaid. Others may find themselves taking several months or
possibly a year or more to repay their debts, even after
negotiations reduce the total amount owed.

The time spent doing so is usually worth it, however, as the
individual who spends a year or more would likely have no other
option aside from bankruptcy if they had not chosen credit
counseling.

Avoiding Consumer Credit Counseling Scams

As with most services concerning money, there are those who will
try to present themselves as consumer credit counseling services
in order to Scam money out of individuals who are desperate for
a way out of debt. These Scams usually present themselves as
offering instant debt relief or claim that they can cancel debts
that you owe for a fee. What they usually offer, however, is a
business tax ID number to replace your personal ID. The worst
part of this is that it is usually legal for a business such as
theirs to request a new tax ID number, but should an individual
use it in an attempt to gain personal credit they are subject to
fines and possible criminal charges.

Before signing up with any debt relief service, it’s important
to check out their background and obtain references if
possible… especially if they charge large fees for their
services or claim to offer instant results.

You may freely reprint this article provided the following
author’s biography (including the live URL link) remains intact:

About the author:

John Mussi is the founder of Direct Online Loans who help
homeowners find the best available loans via the www.directonlineloans.
co.uk website.