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What Do Credit Counselors Do?

Credit counselors are highly trained individuals which often have many years experience and access to tools and information to help consumers deal with excessive levels of debt. It might not always be necessary to retain the services of a qualified credit counselor, especially if the debt is fairly low and can be managed by the individual, but in some circumstances they can help consumers get on credit repayment plans and avoid possible bankruptcy. Is important to understand what credit counselors do and how they may help you combat debt to get back on track financially.

Credit counselors are normally contacted when an individual's debt load has gotten so out of hand that they are unable to make minimum monthly payments. Types of financial scenarios which might require the assistance of credit counselors are when multiple debt collectors are routinely calling your home or work to receive payment or if you've begun to make late payments on existing debt. Experienced credit counselors have insights into the credit industry and have experience to offer hope and guidance when it seems impossible to dig out from enormous amounts debt.

The question though is what exactly does a credit counselor do to assist individuals with their financial obligations. That depends on an individual's particular situation and what type of creditors the outstanding debts are with. Most individuals suffer from excessive credit card debt and it is a common practice for credit counselors to negotiate better terms with a repayment schedule all parties can live with. That might be scheduling a 6 to 12 month repayment plan while waiving penalty interest and late fees or seeking a payoff amount for pennies on the dollar for the outstanding balance. They are also trained to work with individuals to analyze spending habits and determine what created this situation in the first place. Some situations can't be avoided like emergency medical services which get put on a credit card but others are manageable such is happiness shopping or compulsive buying behavior.

Unfortunately, there are unscrupulous credit counseling services which prey upon an individuals dire situation and will offer to help but are really seeking to take whatever money the person has while offering little to no benefit. Much like using the Better Business Bureau when searching for a dentist there are organizations which can recommend responsible credit counseling agencies. The National Foundation for Credit Counseling, the Association of Independent Consumer Credit Counseling Agencies and the United States Department of Justice all have means to find reputable credit counselors. Avoid any organizations which charge a large upfront fee or which take the consolidated payments up front without passing the payments on to the appropriate creditors. When signing up for a credit counseling service always verify with your creditors of the negotiated plan and that payments are being received in a timely fashion.

As with any service to be utilized by the consumer it always pays to ask many questions especially if you are unfamiliar with what is offered or what to expect. Does the credit counselor just collect payments and then pass them on to creditors? Do they provide training classes which teach proper financial management techniques? Are they recognized by accredited national foundations for consumer credit counseling? And most importantly are they making promises that sound too good to be true? At the end of the day a good credit counselor is there to help you get out from under excessive debt and then retrain you to avoid similar circumstances in the future. Credit counselors are not there to be your friend and therefore should be brutally honest about your current situation, what it will take to fix it and what you need to do to prevent it from happening again. Credit counselors do many things the most important of which are helping consumers fix what is broken financially and make the individual whole.