Will Credit Counseling Help You?
If you are struggling with credit card debt and experiencing a financial or personal hardship, you're not alone. Today, more and more individuals in Alabama and across the country are also overwhelmed with credit cards and other unsecured debts such as medical bills, store cards and gas cards, and may be considering credit counseling. In fact, if you are in serious debt and are considering bankruptcy, you are now required to undergo credit counseling before filing for bankruptcy.
The goal of a credit counseling program is to combine or consolidate all of a consumer's debts into a single, more manageable payment each month. Through the benefits of debt relief such as lower interest rates and the waiving of late fees and penalties, a debt management plan (DMP) coordinated by a credit counselor or debt counselor can help consumers get out of debt at an easier, more predictable and accelerated pace.
If you are experiencing a financial hardship and need to explore your debt relief options, answer a few, simple questions and request your free debt relief evaluation and savings estimate at no obligation.
How Does Credit Counseling Work?
Through certified credit counselors or debt counselors, credit counseling agencies provide a variety of helpful debt relief services for individuals and families. This includes assessing an individual's unique debt circumstances, budgeting, financial education, and in many cases, providing you with tools to help manage your finances and move toward the dream of financial independence and a debt free future.
Credit counseling agencies also help provide debt relief by working with debtors to establish a debt management plan, also known as a DMP. Typically, debt management plans could provide debt relief by:
- Lowering monthly payments
- Reducing interest rates
- Waiving of late fees and penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping individuals save substantial money and allowing you to get out of debt in less time than you could on your own if you didn't have the benefits of lower interest rates and continued to pay only monthly minimums
Debt Relief Alternatives
Enrolling in credit counseling programs have helped many individuals and families who are struggling with credit card debts, but it's important to know that debt management requires basic discipline and restraint to avoid credit cards. It normally takes three to five years to complete the program and realize the full benefits of debt relief.
On the other hand, an alternative to debt management is debt settlement, a more aggressive form of debt relief that could help you get out of credit card debt faster, assuming you can accumulate money in a "set aside" account which can later be used to extend a settlement offer to creditors. With debt settlement, it is interesting to note that if credit card companies decide to eventually "sell off" your debt as "bad debt" to a collection agency, creditors may get as little as 10 cents on the dollar, so it is not surprising that credit card companies may be willing to accept a reasonable settlement offer made by you or by a debt settlement company on your behalf. It is important to be aware that when consumers default on the terms of credit card agreements to set aside monies in a settlement fund, creditors may threaten or take legal action. In addition, money saved through credit card settlements are subject to federal taxation. Finally, debt settlement typically will have a negative impact on personal credit, but not as serious or long lasting of an impact as personal bankruptcy.
While debt relief programs help many Americans during times of financial hardship, some people may also benefit from state-assisted programs and services to help them pay for utility bills, grocery bills, or childcare. To help low-income individuals and families get access to basic needs and services, the state of Alabama has a variety of financial assistance programs available, such as the Food Assistance Program (SNAP), Medicaid, and the Low-Income Home Energy Assistance Program (LIHEAP), among others. To learn more about these services, go to the state's homepage and click on the Benefits page.
Debt Relief Savings
To see what debt relief could do for you and how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited debt relief provider who may assist you. It's important to understand clearly how much debt relief can potentially save, how long it will take to realize those savings, and the impact that any debt relief program could have on personal credit and taxes prior to enrolling in any debt relief program.