There are many types of counseling and believe it or not, there is a type of counseling known as credit counseling that actually exist. Credit counseling or also generally known as debt counseling represents a type of process that actually helps lenders to be aware on how to avoid high unpaid debts that cannot be repaid right on the spot. Even though you feel like you deserve the debts due to the mistakes and your own actions taken, well nobody in this world is perfect and everyone needs a little more motivation and inspiration to get you and the world going and just keep moving on. That is when credit counseling comes into the picture. It is just like a type of aid to educate you and help you to reduce the large amount of debts.
The reason why credit counseling is important is because credit counseling establishes a debt management plans which in short known as DMP, negotiate between creditors for consumers. This debt management plan program’s main function is to assist debtors or lender to repay their debts by negotiating well with the creditor by using a repayment plan to make it less complicated and easier to pay back. Debt management program includes reduced payments, a systematic interest rate and also a small fee for the client from the credit counselors during this type of credit counseling. Terms and conditions are also important in this debt management plan to make it much more effective for their clients to live free from debts in the future.
The way debt management programs actually work is as follows. Once you join a debt management plan, the creditors actually close their client’s accounts as well as restricting the account to any charges in the future. The benefit of debt management plan is the monthly payments that are usually less than the usual payments made by their clients with other methods or programs. A reduction of 10-20% is the average that is done by the debt management plan and sometimes the client’s payment can come up to a reduction of 30%.
Another benefit of debt management plan is a lower interest fee charge compare to other credit card accounts which could reach up to 30% interest. Due to being a member in the debt management plan, the annual percentage rate is low that could range in between 5-10%. This way in a short period of time that is less than five years, you are in for a bright debt free future instead of wasting your youth years just to pay back all your debts.
Credit counseling agencies are really beneficial if you come to think of it when re-aging an account are involved. With such inspiration and commitment, I can bet that you are on the way to financial freedom! Another thing you should consider apart from the usual debt management program is bill consolidation.
Bill consolidation helps you to transfer all outstanding and overwhelming debts and loans into a single bill. Bill consolidation also in turn helps you to convert the overwhelming interests from all debts you have at hand into one manageable payment monthly. This shows that bill consolidations actually lowers the rate of interest and in turn brings financial freedom in a short period of time to your doorstep. Be aware and always keep a good eye on which company to look for. Make sure they are able to handle all payments and also offer you lower rates before signing the agreement. Compare all companies to make your decision right! You can even negotiate with the companies on the payments. Another thing you should know that generally bill consolidation is a type of debt management program. Payment can be done monthly with bill consolidation.
So in conclusion, credit counseling is really useful in helping you to make the right decision with debt management programs and bill consolidation to help you clear off your debts!