What Are the Benefits of a Consolidated Credit Counseling Service?

by Neil Kokemuller, Demand Media Google
    Some credit counselors have damaged the industry's reputation with unscrupulous practices.

    Some credit counselors have damaged the industry's reputation with unscrupulous practices.

    If you are considering the benefits of a consolidated credit counseling service, it is likely that your debt situation has reached a point of desperation. Credit counseling is usually a last resort if you have tried debt consolidation and working with your creditors alone. Using these services is sometimes risky, but they may help you avoid bankruptcy.

    Creditor Communication

    One primary benefit of a good credit counseling service is that it serves as an intermediary between you and your creditors. You are probably already getting phone calls and letters from your creditors, debt collection agencies or both. This adds to the burden you already face from falling behind on your payments. A credit counselor reaches out to your creditors to learn about your situation and to negotiate terms of repayment that are more manageable.

    Budgeting Help

    You are better off getting budget assistance long before you get into debt trouble, but consolidated credit companies can help you put a plan together. They review your current income and expenses to see what type of monthly debt payment you can manage. They try to negotiate with your creditors to fit your debt payments within your budget. However, they may also recommend opportunities for you to lower some of your expenses.

    Improved Debt Situation

    When consolidated credit counseling services work well, they can really improve your debt situation. Common financial goals with credit counseling include lowering of your monthly credit payments, a reduction in your interest rates and finance charges, and ideally, one single bill that covers your obligation to all creditors involved your debt solution plan. Combined with a plan to manage your finances better going forward, this can relieve some of the financial stress you have felt.

    Payment Management

    Full-service credit counseling agents actually manage your payment obligations as well. Assuming they were able to negotiate a deal with your creditors, you pay them the agreed-upon amount each month and they make the necessary payments to each of your creditors. The Federal Trade Commission suggests following up with your creditors to make sure the payments are made.

    Considerations

    The Federal Trade Commission advises you check out the agency with your state attorney general's office, local consumer protection agency or Better Business Bureau, which can tell you if other consumers have filed complaints.

    About the Author

    Neil Kokemuller has been an active writer and content media website developer since 2007. He wrote regular feature articles for LiveCharts for three years and has been a college marketing professor since 2004. He has several years of additional professional experience in marketing, retail and small business, and he holds a Master of Business Administration from Iowa State University.

    Photo Credits

    • Hemera Technologies/AbleStock.com/Getty Images