Credit Counseling FAQs
Epic Debt Relief is a debt settlement company, not a credit counseling agency. As such, the following information is strictly for educational purposes and not representative of any of the services that are offered at Epic Debt Relief. This information should serve to demonstrate which types of debt services are best for the customer’s needs, and nothing else.
What is Credit Counseling?
Credit counseling is a service that is very different from debt settlement. Customers will make payments to the counseling agency on a monthly basis. Their payments are then distributed to the creditors based on the plan set up between the consumer and the credit counseling agency. These plans generally last up to 5 years, and the interest rates will be lower than what consumers are used to paying for their credit cards. The savings can be larger because of the reduced interest rates, and counseling is also offered to help with budgeting, spending, and debt.
What is involved in the process?
When a consumer goes to credit counseling, they will work together to determine a monthly payment based on the amount of debt that the consumer has and the creditors that are owed. Consumers sign up with the credit counseling agency and then send the monthly payments to the agency. The agency then negotiates lower interest rates when and where they can, and make the payments to the creditors. However, it is entirely possible that some creditors will not give lower rates or participate in the programs.
What’s the cost of credit counseling?
Every state, company, and individual situation will affect the cost of credit counseling services. Some states have specific regulations about fees and charges, and if you have a lot of debt or creditors you will likely pay more than most people. Set up fees average around $50 while monthly fees for being a member are around $30-$40. These fees are often low simply because your creditors will give part of your payments back to the counseling agency. If a company tries to take your money right away, you might want to avoid them because they’re probably not the best choice in companies to work with.
What about non-profit companies?
There are some credit counseling services that are not-for-profit, but not all of them. There are many companies that operated in the past as non-profit that have lost their tax exempt status because they were found to be partially profitable. However, most non-profit companies will still charge you fees for their services unless you are in a financial situation where payment is not an option.
Does this mean that non-profit services are regulated by the government?
No, they just have tax issues to consider for their non-profit operations. Many of the non-profits that exist are neutral and will attempt to be impartial when assessing your needs. Some companies, for profit or not, will still have a vested interest in signing up consumers regardless of their situation simply for the fees that they will earn.
What about Epic Debt Relief? How does it compare to counseling?
Epic Debt Relief offers services to people who legitimately have issues with paying off their debts and who cannot afford to make payments on their own. Credit counseling is designed more for those people who have budgeting and spending problems and can afford their bills, but just have put themselves into a bad situation. If your main issue comes in avoiding calls and negotiating interest rates, credit counseling is the better choice because it will have a smaller impact on credit scores. Debt negotiation, however, is a little more serious but is designed for those people who are serious about their debt settlement options and have nowhere left to turn.
What is the downside to credit counseling, and does it affect my credit?
Yes and no. If your bills are up to date, you’ll have a negative effect on your credit for using the services, but if you are behind, using counseling to catch up payments looks good in most cases. Keep in mind that debt settlement and payment plans don’t actually impact your credit score, but they will affect your report when lenders see reported on there that you worked with credit counseling and/or debt settlement. Credit counseling also doesn’t lower monthly payments enough for some people, which is what they need in the first place. Since you’re not settling debt, you have to rely on the counseling company to make your payments on time each month, and if they don’t your interest rate might go right back up. The final downside to credit counseling is that not all creditors participate. This is something that you don’t find out until the agency tries to make payments to them, and then the account will be considered past due because they didn’t get the payments from the counseling service because they don’t participate.
Finding the right alternative to bankruptcy is critical to your success in taking care of your debt once and for all.
Author: Eric Avenaim
Article Source: EzineArticles.com
Tags: credit repair uk, bad credit repair advice, credit repair business
