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Consumer credit counselling service

Credit Counselling

There are many consumer credit counselling service lead organisations, which are non-profit, and will work with you to manage your debt. However, do not misunderstand the word “non-profit”. Being non profit does not mean that the services are free; in fact the service fees may be very high. It simply means they do not take profit. Make sure that the counselling organization is legitimate, and do not have hidden fees.

There are many services which offer telephone counselling, internet counselling, and advice lines. The best thing to do is to find a service which offers person-to-person counselling. These consumer credit counselling organisations will advise you on how to manage your debt, and help you develop budgets, and offer workshops and materials. The counsellors in such organizations are trained in areas of consumer credit, debt management and budgeting. They will discuss your financial issues and crisis with you, and will develop personalised plans for your situation to help you get out of debt. Usually, a session will last for an hour or more, with many follow up sessions, until you get out of your debt.

Debt Management Plans (DMP)

Once your sessions with the consumer credit counsellor start, and it has determined that your financial situation is largely due to debt or your inability to pay your debts, the counsellor may recommend you join a debt management plan (DMP). A debt management plan is not for everyone, so make sure that the right recommendation has been made to you by the counsellor. Join a DMP after the counsellor has spent enough time assessing your financial situation, and has offered you customized advice on organizing your money.This can be the benefit of a consumer credit counselling service in that they can readily identify which options are open to you and explore the right option first time.

In a DMP, each month, the debtor is required to deposit a certain amount of money to the credit counselling organization. The credit counselling organization then pays back your unsecured debts, like credit cards and medical bills, on your behalf. The counselling organization does this according to a payment schedule, which was decided by you and your counsellor. Your creditors may agree to reduce your interest rates or not claim certain fees, but verify with your creditors to confirm that theyaccept these concessions that the credit counselling organization has provided.

Normally, a DMP will take almost two years to complete, and requires the debtor to make deposits to the counselling organization frequently, and punctually. The counsellor has to determine initially how long it will take to complete the DMP. You may have to consent to not applying for, or using, any additional credit while you’re participating in the plan.
Be sure that the counselling organization you are using are experienced and well versed in the debt management arena. Also be wary of credit counselling organisations that:

• Charge very high fees for enrolling you into counselling programs, or DMPs. If you cannot afford such high fees, then enrolling into such programs will put you in further debt.
  
• Try to enrol you in a DMP without spending ample time reviewing your financial situation. Only enrol into a DMP when you are satisfied that enough time has been spent by the counsellor on you.
  
• Offer to register you in a DMP without instructing you on budgeting and money management skills.
  
• Insist that you make payments into a DMP before your creditors have accepted this.

When you find yourself overcome by debt, be sure to tackle the problem head on. Leaving debt in the background can mean your total debt is accumulating longer than it needs to.

Consumer credit counselling services exist and there are many highly reputable organisations operating, similarly there are many debt management solution companies that can offer you equally if not better consumer credit counselling.

For a complete debt management solution, visit www.finance-inc.co.uk

For IVA (Individual Voluntary Arrangement) visit www.1va.co.uk