Some financial columnists and others recommend that consumers who need credit counseling get help through companies affiliated with the National Foundation for Credit Counseling. However, people seeking counseling may not be able to resolve their financial problems. One of the keys to successfully using credit counseling programs, is seeking help at the first sign of financial trouble rather than waiting until it is full of debt.
Credit Counseling Programs – Function
The National Foundation for Credit Counseling described in its website, consumers can receive services through its network of credit counseling programs. According to the NFCC, people can get advice at low cost or certified counselors to manage credit and manage debt and financial problems. People who want to buy a home can work with counselors approved by the U.S. Department of Housing and Urban Development to prepare for buying a home. Owners can also get advice on funding if their mortgage payments have become unaffordable.
Credit Counseling Programs – Features
Consumers struggling with debt problems can talk to an NFCC credit counselor about enrolling in a program of debt management. In such cases, the participant pays the debt through monthly deposits submitted to the credit counseling agency and the agency divided the funds among the creditors of the participant. Counselors may be able to persuade creditors to waive any late fees and finance charges to help a customer to pay their debts faster. It may take up to 60 months to complete a program of debt management. The length of time depends on the debt of a person.
Credit Counseling Programs – Effects
Participate in a debt management with a credit counseling agency can not obstruct your credit score. However, you may have trouble qualifying for new credit cards and loans. Notes on the credit reports indicate that the agency handles accounts, and records will remain until he pays the bills in full. Creditors and lenders may refuse to open a new credit and loan accounts up to solve their other debts.
Credit Counseling Programs – Warning
A Bankrate.com article entitled “Frequently Asked Questions about Debt and Credit Counseling”, warns consumers to beware of any credit counseling firm that recommends immediately enroll in a debt management. The article notes that credit counselors must first examine the client’s financial situation and plans of action to deal with financial issues of each person rather than recommend that customers sign up for a “cookie-cutter” program. Counselors also must inform customers in advance and in writing of all costs associated.
Credit Counseling Programs – Considerations
Some financial web sites and publications question the effectiveness of credit counseling. For example, an MSN Money article entitled “Why Credit Counseling often fails”, cites NFCC statistics that indicate only a third of people who sought help through NFCC agencies were able to manage their own finances after a counseling session. The article also indicates that about 45 percent of people who enroll in programs for debt management not done. Do not be discouraged from participation in a legitimate, but people with serious financial problems may be unable to avoid bankruptcy, even after seeking credit counseling.
