How a Credit Counselor Manages Your Debt

Credit counseling allows you to consolidate your debt with the help of an advisor who creates a monthly payment plan to satisfy a minimum amount of your combined outstanding balances. By contacting your creditors, your credit counselor can negotiate lower interest rates that - when combined with a consistent payment schedule - will help you eliminate your debt.

Of course, the only way you'll get rid of your debt with a debt management plan is by sticking with the strategy your credit counselor recommends. That means you need to have discipline.

A debt management plan is not a short-term solution. Typical credit counseling programs last at least 5 years.

What You Need to Know About Your Credit Report

By working with a credit counseling agency, you acknowledge that you're getting help paying your debt. As a result, your agency and/or creditors will tell the credit bureaus about your participation in a debt management program.

The downside of incorporating a debt management plan is that this information will be displayed on your credit report. Consequently, some lenders will not extend you credit until you complete your program.

This fact, however, may be the incentive you need to stick to your program and make on-time payments. After all, once you complete your credit counseling program and pay off your debt, you should see minimal impact on your credit report.

Additional Debt Management Tips

• Seek out credit counseling agencies that offer a variety of services and are licensed in your state.
• Request free information and don't agree to a debt management plan over the phone – get any verbal promises in writing.
• Look for examples of satisfied customers (testimonials) who were in a similar situation as you and resolved their debt.
• Once a debt management program is in place, contact your creditors to confirm they've accepted the proposed plan.
• Always check your bills to make sure the agency you're working with is fulfilling its payment promises.
• Don't fall behind on your payments. Doing so will make it extremely difficult to get a new debt management plan accepted.

If you're confused about your financial situation and need additional help negotiating your debt using credit counseling, please contact us today for a free, no-risk consultation.