A Look Inside Debt Consolidation Credit Counseling
by Michael J Brazier,
published:
syndicated: 0 | total views: 5059 |
word count: 864
laesbarhedsindex readability score: Very Difficult Readability
on the net: http://www.freedomdm.org/
UNITED STATES, Mar 11 — One of the biggest questions is, how does debt consolidation credit counseling work?
A nonprofit credit counseling agency that abides by state regulations and creditor guidelines will begin with a free counseling session reviewing your financial addendum.
A financial addendum is an outline of your debt to income ratio on a monthly basis, assets and liabilities. This is also known as a household budget.1563
O
ne of the biggest questions is, how does debt consolidation credit counseling work?
A nonprofit credit counseling agency that abides by state regulations and creditor guidelines will begin with a free counseling session reviewing your financial addendum.
A financial addendum is an outline of your debt to income ratio on a monthly basis, assets and liabilities. This is also known as a household budget. A certified credit counselor reviews your monthly expenses versus your income to properly assess a monthly payment for your credit counseling plan that is affordable and falls on a due date that comfortably fits within your other bills and pay schedule.
This is done first to help consumers identify where they are currently with their finances and help establish where they want to go long term with their goals. A financial addendum also helps your credit counselor qualify you for a monthly payment that you can easily manage and ensures a successful completion of your program. Some creditors utilize the financial addendum to determine how much interest will be reduced.
From there, a credit counselor will then ask for the accounts you want to enroll, names and current balances. This data is used to find out what your monthly payment will be on the debt consolidation plan. The monthly payment is based on pre-established creditor guidelines nonprofits must abide by for their clients to receive program benefits such as interest reductions and the stopping of fees.
Eventually a credit counselor will want to review your statements for current fees, finance charges, and due dates in an effort to compare to the rates on the program and show the potential savings with enrollment.
At this point, a certified counselor should have provided you a budget analysis of your financial addendum, a breakdown of the total monthly payment in the program, and the potential difference in the savings between your current terms and the proposed modified terms under a nonprofit credit counseling plan. You now have a solid accounting of where you are, where you want to be, and how you can get there with a debt consolidation program.
If the payment is affordable and the savings are there and proven it is then time to select a payment date to begin your plan. Once you select a date and have committed to a plan a credit counselor should then send you any paperwork to finalize an agreement and working relationship between you and the agency to manage your debts.
After you have submitted your paperwork it is then recommended to make one last call to your creditors and close the accounts as – closed by account holder- rather than the creditor closing the account in the enrollment process. Whoever closes the account should not affect your actual credit score however some lenders may use such verbiage on your credit report to justify charging you a higher interest rate on a loan.
Keep in mind: There are some things that do hurt your credit and some things that do not that a lender will try and use to justify higher rates and fees from the affiliated banks and agencies.
Once you are enrolled in the program the credit counseling agency should be handling any communiqués with your creditors on your behalf and providing you updates as needed with regard to the status of your accounts enrolled in the program.
35 percent of your credit score is factored by timely payments every billing cycle. Another 30 percent is accounted by the amount of debt you owe. A debt consolidation credit counseling plan helps improve your credit in these two areas each billing cycle, building your credit score while lowering your debt amounts.
You see, as long as you make your payment each month a true nonprofit credit counseling agency will in turn then disburse funds to your creditors each and every month, satisfying the demand for 35 percent of your credit score, timely payments.
As your interest rates are reduced from their original rates your regular monthly payment through the credit counseling agency then applies more to the principle than the finance charges each month, bringing your balances down much faster than paying it on your own at high interest rates. This reduces the amount of debt you owe faster and further assists that 30 percent factor of your credit score in a positive direction.
A debt consolidation credit counseling plan can positively help eliminate debt while improving your credit score. Whether you are current on your accounts or behind, if you are paying more than 15 percent in interest you are paying way too much. A $5k debt at 15 percent interest could take 100+ payments and 3xs the amount actually spent to pay off the debt in full outside a credit counseling plan. Call our BBB rated A+ nonprofit credit counseling agency today for a free budget counseling session and debt consolidation quote. Visit our website freedomdm.org or call us at 800.905.1563. See how we can help you be debt free with Freedom Debt Management, Inc.
Communicate directly with Michael J Brazier, the author of this article. Ask questions, send suggestions, comments, engage in conversation, or perhaps you would like to submit a project.
Click Here to ask a question, send a comment, or proposal.
At times of deep recession and high unemployment, one of the traditional measures to which governments aspire in order to stimulate their economies is a reduction in Corporation Tax rates. The reasons are two-fold. First, lower CT rates make individu
Recent data emerging from the Bank of International Settlements ( BIS ) confirms what most of us already suspected – the tax evasion industry is very much alive and kicking despite efforts by the G 20 group of major countries to bring participa
Taking the time to review debt settlement law firms or settlement companies is an important part of avoiding issues before actually making the commitment to proceed with a debt settlement program. Reviewing the company is about finding out as much in
Deciding to try debt settlement is a major financial decision for anyone who is struggling to pay their bills every month. While this process is a good way someone to avoid bankruptcy and/or reduce their debts to an affordable level, it i
By understanding business tax deductions, business owners may enjoy personal benefits from business expenditures - a nice car to drive, a combination business trip/vacation, retirement savings plan - if they follow the myriad tax rules.
Everyone knows the world is not perfect. So, whatever we do, none should expect smooth sailing. If you are a businessman then you better know the significance of it. You have to face financial hardships, incur loss for which adverse credit problems m
Tax form 2290 filing is a tough task when it is done using paper filing. Let us see how e-filing technology has made this process really easy and error free. E-filing is nothing but the process of submitting your HVUT form 2290 return filing electron
If you are someone who is going through a financial slump, don’t be uncomfortable to ask for a cash advance. Although it’s one of the few things that will happen to almost everyone, you will be happy to find that there are ways to get you
Applying for a small business loan refers to the process by which a business owner requests funding from a lending institution. The process is usually not very easy and many documents are required for a lender to consider loan requests.
Bad credit is affecting nearly 45% of the United States population. With the national average credit score being 723, a near majority is scoring below and startling, well below 700. And more and more members of the middle
The debt management industry and the services within can be easily confused. While some consumers think debt management programs hurt credit there are some plans that can actually improve credit while enrolled. Primarily, it depends on the status of
Since its opening debut in 1950 credit card debt has been an ongoing problem as consumers began going into debt at an alarming rate. Trapped into unbearable terms and fees the cycle hasn’t changed much since inception. 85% of consumers in Ameri
Collection calls can become unruly and unprofessional but they do not have to. Most calls that entail such are usually in violation of your rights under the Fair Debt Collection Practices Act. What you don’t know can hurt you. Take an accountin
A debt consolidation plan is the consolidation of all unsecured debts into one monthly payment to a third party agency, usually nonprofit. Debt consolidation can eliminate debt while improving your credit with timely monthly payments at reduced fixed
Identity theft is up and running in America. This very popular crime has accelerated as the economy has declined and more people are acting out of desperation on both sides of the fence. With criminals looking for an easy steal deal and consumers app
Syndication
tweet
PDF version
Printable version
Publisher HTML version
Discussions (0)
Email Article
Post New Comment