There are numerous credit counseling service providers available to consumers, and thanks to the increasing number of people who are struggling to get out from underneath a mountain of debt, there are new credit counseling organizations created regularly.
Even though the majority of counseling agencies are not for profit- you need to do some research if you are considering signing up for their services. There have been reports of credit counseling organizations keeping your entire first month payment (when you believe it's going to your creditors), and each payment you make does include a portion of money that's kept by the credit counseling service (for operating expenses). You might also be surprised to learn that the majority of credit counseling services are funded by credit card companies- so of course, it's in their best interest to try and get people to pay as much on their debt as possible, even if they aren't able to afford the payments. Research will help you find a reputable credit counseling agency that really can help you decrease the amount of debt that you have.
Couldn't You Just Do it Yourself?
Some people argue against using credit counseling services because theoretically, you can pretty much do yourself what they will do for you. A credit counseling agency is going to negotiate payments and interest rates with each of your creditors- something that you could attempt on your own. The agency will take your payments each month (plus a fee for the service) and distribute it to your creditors on time- again, something you could do on your own with discipline. But isn't it usually a lack of discipline that leads people to a credit counseling service? It's important to be honest with yourself and if you don't feel you can keep up with making your monthly payments on your own- you should consider enlisting the services of a credit counseling organization.
Credit Counseling Agency Services
If your situation is desperate enough- the agency will advise you to allow them to negotiate with your creditors on your behalf, and then accept your monthly payments for you.
Other services provided by an agency include general money advice and budgeting tips. Their purpose is to help people get their finances back on track by educating people on better money management.
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