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Debt Management through Credit Counseling
With a credit counseling agency, you consolidate your bills by working with a counselor who will help you determine a monthly payment plan that will satisfy a minimum amount of the debt. By connecting with a credit counseling agency in the DebtHelp network, consumers can reach a reputable credit counseling agency. A credit counseling program typically lasts for about five and a half years. The agency you work with will contact each of your creditors and offer a proposal to lower the interest rate to a reasonable 9-10%. With the new lower interest rate and a consistent payback schedule, you reasonably can expect to be debt-free at the end of your program.
However, there is a bit of a downside to debt management through a credit counseling agency. While you are a part of the credit counseling program, your agency and/or creditors will report to the credit bureaus that you are a client. Your credit report will be flagged until you complete the program, and some lenders may not extend credit to you until the credit counseling program is satisfied. Additionally, some of your creditors may fail to accept the proposal of the counseling agency, so it is important to stay informed so you do not send insufficient payments.
If all of your creditors accept the proposals and you abide by your debt management plan, your credit will be impacted very little upon completion, but essentially will be frozen until that time. A consumer credit counseling agency typically will save you money in comparison to a consolidation loan, and also will take you less time to become debt-free.