This is Why You Should Consider Credit Counseling Difficult Times

Not all people are born into money, and at some point in their lives, they need significant capital investment to kick-start their dream business, pursue education, buy an asset, or pay day-to-day bills. Even if you plan things to the last detail, something might go wrong, and you become unable to pay your monthly installments on time.

If we have just managed to describe your current situation, then what you read further will help you tremendously in these perilous times.

What is Credit Counseling?

Tashatuvango/Shutterstock: Understanding the basic meaning of credit counseling

It is precisely what the name suggests. Credit counseling is the advice offered by a professional on how to manage your finances better, make an ideal debt arrangement, evaluateyour current options, and draft a personalized future course of action. Luckily, you do not have to shell out money to get some quality counseling, as many NPOs offer these services for free.

Benefits of Credit Counseling

fizkes/Shutterstock: A look at the benefits of credit counseling

• Guide to Daily Budgeting – It is easy to lose priority on the expenses that arise out of essentials rather than unnecessary items. A counselor helps you set your monthly limits, evaluate your spending, and enables you to find a balance.

• Student Loans – Student debt has been a long-term thorn in the side of youth. A credit counselor can help optimize your payments after discussing it with your lender. If that does not work out, you can try refinancing your loan.

• Housing Loans – Struggling to pay rent or EMIs? It might be time to start taking guidance on possible courses of action. Nobody wants to land in a place where there is no turning back.

• Loan Management – If you are too jittery to execute advice received from the counselor, it might be time to consider handing over the reins. An adviser will attempt to reduce your installments, lower rates by talking with your creditors. Over the course of your loan period, you will pay the money to the counselor, and in turn, they will pay off the creditors.

• Filing for Bankruptcy – This solution will only be suggested in dire circumstances when there is no way out. The consultant will guide you through the legal process and advise on how to avoid this terrible situation in the future.

What to Look for in a Counselor?

Photographee.eu/Shutterstock: choosing the right Counselor

Housing societies, universities, credit unions, and many non-profit organizations offer credit counseling. However, be mindful that not everybody who provides this type of guidance is qualified to do so.

Always research thoroughly before finalizing a coach. To ensure quality services, ask for accreditation/ certification from organizations like the ‘National Foundation for Credit Counseling’ or the ‘Financial Counseling Association of America.’ You can also check for complaints with the state attorney’s general office and ‘Better Business Bureau.’

While you can get the basic advice for free, debt management services will be charged, so it’s better to always ask for payment terms upfront.

 A Few Things to Keep in Mind

While seeking counseling and loan management services, the ideal scenario would be that your creditors will play ball and be ready to negotiate the payment terms with the counselor. There are some serious drawbacks that many fail to point out. Like, creditors sometimes refuse to cooperate, and most importantly, these agencies run for a profit, meaning they will put their own needs before yours.

Everything has pros and cons, and there is a common misconception that credit counseling should only be a solution when matters are beyond repair. If the facility is availed early on in the stages of financial trouble, you may be able to get away unscathed and without spending a dime on these services. Do not be afraid of asking for help; after all, we all need it at some point in our lives.