Tuesday, January 29, 2013

Do You Need Debt Counseling?

Being in debt can be a nasty situation to be in. Not only do you have to face the embarrassment of admitting that you failed at your finances, you also have to deal with the disappointment that your loved ones will feel.

While the beginning will definitely be tough, making the decision to work on getting out of debt will make the situation better as you go along. It will not be easier, but the feeling of paying off your debts slowly will encourage and lift your spirits up. There is nothing more motivating than seeing your debts get smaller each month you send in payments.

But the question is, how do you get out of debt effectively?

Debt counseling is one of the many options that you can avail. While there may be a lot of selections, you need to base your choice on your financial capabilities.

If you are able to pay for the minimum of your debts and you do not want to have too much effect on your credit score, then debt counseling is the right path for you. This type of debt relief will put you in the hands of a credit or debt counselor that will assist you throughout the whole process. The great thing about having this assistance is they will analyze your finances for you. The counselor will help you come up with a debt payment plan - and make sure that it is based on an amount that you can afford.

This payment plan will stretch your term longer - usually around 5 years. The aim is to make your monthly payments smaller so you have more extra for your day to day needs.

The debt counselor will also help send your payments to creditors. That way, you will not miss out on any payment. You only have to send the total monthly payment and the counselor will distribute the appropriate funds to their respective creditor recipient. Because that particular task had been lifted, you can concentrate on making sure that you meet your debt payments and if possible, increase it so you get out of debt faster.

While it is not a guarantee, your debt counselor will try to negotiate for a lower interest rate. If possible they will also try to have any penalty charges waived off. But this should not be guaranteed to you upfront just to entice you to get their services. If they are not able to deliver, that will make them in violation of the Telemarketing Sales Rule (TSR) that prohibits any debt relief company from making false promises. So be very careful of your choice of company.

All in all, you may find that debt counseling is a great option. However, take note of the qualification on the income. You need a steady and stable source of income to be able to afford your payments. Otherwise, you may have to choose another debt relief option.

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