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Debt ConsolidationDebt Relief : Overview of Credit Counseling as a Debt Relief Program

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Credit Counseling programs (Overview)

Credit Counseling: A process of offering education to consumers concerning ways to repay existing debts and avoid incurring additional debts. Credit counselors may negotiate with creditors to establish a debt management plan (DMP) for a consumer as a means of repaying existing unsecured debts.* A DMP typically offers reduced payments, waived fees and interest concessions as dictated by the individual creditors.

Learning more about how a debt management plan could be a potential solution to your debt or credit problems is a good step. However, it is important to always keep in mind, that you must also educate yourself about all options that are available to you (both public and private services) before deciding what will best serve your personal finances in the long run. Everyone's financial situation is unique. All too many people have allowed themselves to be talked into a quick solution just because of the desperate position that they were in. This could possibly, and unfortunately often does, make a bad situation worse. Spend a little to get educated.

The first step in your education process should be to find out exactly what your credit looks like. Don't allow someone else to tell you how good or bad your credit is without taking a good look at it yourself first. The great news is that you can now get a copy of your credit report free (once per year), even if you haven't been recently turned down for a loan, credit card or other financing, as was the case in the past. Due to the Fair and Accurate Credit Transactions Act (FACT Act), you can now request a copy online, over the phone or by mail. Get details on how and other tips about protecting your credit at a web site set up by the three nationwide consumer credit reporting agencies: www.annualcreditreport.com. You should get your free reports yearly, even if you aren't having problems. Sometimes the information on your report may be wrong, and that can cost you more on all sorts of things, from mortgages to car loans… and even the insurance on your car! You can, but certainly don't have to pay for a service that charges to "keep an eye on things" for you. You don't have to let fear get the best of you. Be proactive and stay on top of things by reviewing your report and by setting up fraud alerts. So, before you sign up and pay someone else, at least try monitoring your own credit. You may find that it is easier than you think and that you can put your mind at ease all by yourself. Save those fees and put it towards other necessities, like paying down your debt, for instance.

And last, but certainly not least, when choosing a debt help or credit counseling service, be sure to ask questions. Ask lots of questions. Most importantly, if a company seems reluctant to answer everything to your satisfaction, leave the office or hang up the phone. There are literally thousands of companies, both for profit and non-profit, that exist to help you with debt consolidation, negotiation of payments or of outstanding / past due balances, consolidation loans, etc. And in that group, there are plenty of good companies out there that are willing to treat you with the respect that you deserve. Find the one that takes the time necessary to explain to you exactly what services they will provide, the costs involved and the impact that it may have on your credit record, whether it be positive, negative or both.

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