When you don't know what to do about the overwhelming debts you've acquired, a credit counselor may be able to help by providing debt consolidation credit counseling.
The credit counselor is your contact person at a debt consolidation credit counseling agency. He or she will meed with you personal to provide customized education so you can make good choices. Most agencies will help you develop a Debt Management Plan
HOW TO FIND A DEBT CONSOLIDATION CREDIT COUNSELING AGENCY
You can create a short list by referring to the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies for agencies in your area. A check with the Better Business Bureau and a clean record on a Google search will help to complete your due diligence. You should avoid any upfront payment demands from the agency.
CREDIT REPORTS AND CREDIT COUNSELING.
Annually, you are entitled to receive a free credit report from each of the major three credit bureaus. You should obtain your credit reports and review it prior to debt consolidation credit counseling. Once the credit counseling or Debt Management Plan is completed, recheck the credit report for improvements or changes. Sometimes creditors will remove delinquent payments or re-age your accounts resulting in an improved report.
BANKRUPTCY AND DEBT COUNSELING
The Bankruptcy Act of 2005 requires that federally approved credit counseling must be completed six months before filing for bankruptcy.
DEBT CONSOLIDATION VERSUS DEBT NEGOTIATION
With debt consolidation you pay the debt, but the interest rates are reduced. Debt negotiation reduces your total amount of debt, but also affects your taxes and your credit report. Debt consolidation is less harmful to your credit score and to future chances for good credit terms in the future.
PROS AND CONS OF DEBT CONSOLIDATION
If you use a home equity loan as a debt consolidation loan, your interest rates will be lower and you can write off interest payments on your income taxes. Another benefit is the lower monthly payment you will receive if you extend your payment period.
If you choose to use a debt management company for your unsecured debts, you will have lower rate with the creditors through negotiation so your repayment requires less time and you only need to provide one payment to the debt management company. They distribute the payments to the creditor. Either a debt consolidation loan or the services of a debt management company will have some impact on your credit score.
DEBT NEGOTIATION PROS AND CONS
The purpose of a debt negotiation company is to reduce the loan amount by negotiation with the creditor. Some creditors will reduce loan amounts if they are concerned you will go into bankruptcy otherwise, other will not negotiate even if you are using a third party.
Although debt negotiation has a more serious impact upon your credit report since creditors must write off a portion of the debt. Usually after one year you will be able to locate some sub prime lenders who will extend credit. Reduced debt must be reported as earned income to the Internal Revenue Service.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration . He is working as writer and financial consultant to find a Personal loans, Debt consolidation, home equity loans at cheap rates visit www.taperman.com