canstockphoto21350556Credit counseling services are often receiving mixed reviews. There are many reputable services out there. You should take precaution since there are also credit counseling companies with a bad reputation. Credit counseling is now required before filing for bankruptcy If you’re looking for help dealing with your outstanding debt, be aware of the advantages and pitfalls of using a credit counseling company.

Pros of Credit Counseling

1. Credit counseling services make it easier to negotiate with creditors. Some creditors are willing to discuss payment plans with credit counselors. You may get a better deal and more breathing room by using a credit counseling service.

2. Make it possible to consolidate your payments. Many firms will allow you to consolidate your debt into a single payment each month. You will be making a payment to the credit counseling company. Remember, the credit counseling firm must make all of the individual payments on your behalf.

3. It can make it easier to get a new line of credit. One of the benefits to getting credit counseling is new credit will be secured for you. They will actually work to have your credit card applications approved.

4. Put a stop to harassing calls. The bill collectors will leave you alone once you’re on a repayment plan. You can easily do this yourself by making a request in writing.

Finding a reputable and honest credit counseling service can be helpful for getting out of debt. There are many advantages to using a well-qualified credit counselor. But there are also some disadvantages to watch out for.

Cons of Credit Counseling

1. The creditors may not receive your payments. There are numerous complaints filed each year of credit counseling companies failing to send the payments to the creditors.

2. They may not deliver on their promises. Some companies will use tactics to get their hands on your money by false advertisements that’s too good to be true. After the credit counseling company get their portion, your situation may remain the same.

3. It can possibly affect on your credit rating. There is one method that can make your credit worse. The credit counselor may suggest for you to stop making payments on your debt and put the payments into an account instead.

Your counselor would approach by suggesting to pay off the debt at a reduce amount once a large lump sum is accumulated. Your credit will suffer due to nonpayment during this process. Make sure that you choose a reputable credit counseling firm since the money in the account is under their control.

As you can see, the potential drawbacks are serious. It’s very important to do your own research to find a reputable credit counseling service. Many consumers are led to believe that a service with a non-profit status is reputable. You should remember that a non-profit is a company isn’t about earning a profit.

You’ll be able to find a counseling service in your area that you can visit in person. Checking with the Attorney General and Better Business Bureau is an effective way to see if there are any complaints or legal action taken against the company. Doing an online search can also help you find complaints and negative reviews from consumers.

Ask about the fees and the services that they offer. Also find out how many of their employees are paid a salary. Are they compensated for signing their customers up for certain services? Make sure you receive it in writing since verbal promises can be conveniently forgotten and hard to prove.

Credit counseling can be beneficial or challenging to your goal of eliminating debt. Find a reputable credit counseling firm by doing your own research thoroughly. Following these tips will move you in the right direction.