Debt Settlement Plan Via Credit Counseling

A debt settlement plan overseen by a credit counselor can enable you to consolidate your bills, create a monthly budget, develop a payment plan that helps you pay off your debt within a specified period of time (this method utilizes variables such as outstanding debt and annual interest rates).  The counselor may act as an intermediary between you and the credit card companies, banks, and/or other lenders. 

A borrower should note that a when a reputable credit counseling company contacts your lender they are usually able to lower your annual interest rate on your debt from an average of 5% to 15%.  When the credit counselor contacts the lending institution your lender normally reports you to the credit bureau.  The credit bureau notes this activity on your credit report and, usually, other lenders will not extend loans to you until you have completed the credit counseling program.

Credit Counseling Agencies are great resources if you are an individual needing guidance on controlling your spending habits, are unable to negotiate a lower annual interest rate on your outstanding debt, are unable to create a budget, or you just need help developing a debt reduction arrangement. If you are capable and disciplined enough to manage these activities on your own credit counseling may not be necessary.

  • Share/Save/Bookmark