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Can consumer credit counseling help
avoid foreclosure?
Many people see the advertisements for consumer
credit counseling and wonder if it can really help them get
out of debt and avoid situations such as foreclosure. Consumer
credit counseling may not directly help avoid a foreclosure,
but there are some advantages to contacting an agency.
A credit counseling agency can help individuals
who are in financial trouble by teaching them how to budget
their money and have experience communicating with lenders.
Keep in mind that working with a credit counseling
service may help with the debt, but it will hurt your credit
because all of your accounts with the service will be labeling
as such on your credit report.
Credit counseling does not improve credit
scores. It only hurts them.
Because of agencies' experience and knowledge
in the field, sometimes credit counselors can help debtors
find solutions that they might not have otherwise realized.
Many times a credit counselor can help minimize penalties
and negotiate lower payments with lenders. They can also help
to settle your debt for less than what is due on some occasions.
Consumer credit counseling agencies can help
you get your finances on track, but it if considering this
option, it is extremely important to find the right agency.
There are several important things to look for as many people
are falling for scams daily.
Believe it or not, there are some agencies out
there who are strictly in business for a profit and some who
even try to scam their clients. A non-profit agency may be
less likely to be running scams, but this is not a guarantee
in and of itself.
Look for an agency that gives a full account
of what charges and fees you can expect up front. And if you
know someone who has used an agency, look for recommendations.
Sometimes the best way to find out if something is what it
seems is to ask someone who as already been there.
Also, many agencies may be recommended or certified
by a third party. Consider these agencies first above others
and ask questions about what to expect. Doing the research
can keep you out of trouble.
Many counseling agencies work by asking that
you make a monthly payment to them. They then distribute the
money as they see fit to debtors.
It is important to keep in mind that if you
choose to use a consumer credit counseling agency and to make
regular payments to them, you are still liable for the debt
you have incurred.
What this means in application is that even
if you make your payment to the agency, the agency could fall
behind in making your payments, or in the worst case scenario,
they might not make them at all.
Even if this is the case, you are still responsible
for making those payments. To avoid these types of scams,
check with the Better Business Bureau before trusting a consumer
credit counseling agency.
And even then, it would be a wise idea to check
your credit report on a monthly basis to make sure there is
nothing there that you are not already aware of.
While consumer credit counseling agencies may
be helpful and a suitable solution for those who are not money-minded,
many of the services rendered through one of these agencies
can be done just easily on your own if you are savvy enough
to do the research and stay on top of things. Communication
with lenders is the key concern in avoiding poor credit situations
and foreclosure.
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