Avoiding Financial Crisis

According to an article by CNN, more than 25 million, or about 1/3 of all households, are living paycheck-to-paycheck. Many consumers are just one disaster away from a financial crisis. As prices continue to increase, and raises are few and far between, many Americans have been relying heavily on their credit cards. Your credit card debt can play a pivotal role in your financial well-being and future. If you are struggling to meet your financial obligations each month, then you may wish to consider credit counseling.

Top 5 Credit Counseling Facts

Smaller Payments

By enrolling in a credit counseling, your debt will be paid off in 3-5 years. Instead of making large payments to each creditor, you will make one smaller payment to the counseling agency. Payments are smaller because counselors work with your creditors to help you get lower interest rates on your cards and will work with the creditors to stop over limit and late fees, allowing you to payoff your debt faster.

Non-Delinquency

Your accounts do not have to be delinquent to enroll in counseling. However, the cards will be closed and you will no longer be able to use them.

Debt Management Plan

Counseling will stop creditor harassment. Once you are enrolled with a counseling agency, a debt management plan (DMP) will be submitted to any creditors, medical accounts, or collection accounts you have. Once terms are negotiated, collectors will no longer contact you.

Your Credit Score

Credit counseling does not hurt your credit, however, there may be a notation on your credit bureau that you are using a counseling agency. Many creditors look at your debt to ratio income when making the decision on whether to provide financing or not. By reducing your debt it will help your credit score.

Anyone who is in a financial crisis can request counseling assistance. Regardless of income level, anyone who has a significant debt to income ratio can apply for counseling assistance to help improve their situation.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.