To do this, they negotiate new payment plans directly with their creditors. You then pay a monthly payment to the counseling center, which pays your creditors on your behalf. If you are over-indebted, a debt advisor can negotiate with your lenders on your behalf to get lower interest rates and reduced monthly installments. This makes your debt more manageable and teaches you accountability, as your agreement with your debt advisor may fall if you miss a payment.
A certified credit advisor will assess your debt, budget, and credit. They will also talk about your financial needs and goals. Then they will help you find the best method to reduce debt based on your individual situation. Not only can they teach you how to manage your money better, they can also actively help you reduce your debt by enrolling you in a debt management program (DMP).
It’s important to note that while credit advice doesn’t have a negative impact on your credit score, completing a debt management program is possible. Legally speaking, credit advisors must inform you of all debt relief options and only recommend what best suits your situation. If a debt management program is the right option, you can sign up for the initial credit advice evaluation through the same agency you spoke to. When you apply for debt counseling, your creditors will be notified by the National Credit Regulator.
Credit advisory organizations are typically non-profit organizations that advise you on how to manage your money and debt and usually offer free educational materials and workshops. Debt Counseling is a unified system for restructuring all your debt installments into a consolidated and affordable monthly repayment. However, some counseling agencies may recommend that you sign up for a debt management plan that appears on your credit report but won’t negatively impact your score. Certified, not-for-profit debt advisors can help you decide whether to take important financial steps, such as enrolling in a debt management plan, consolidating your balances, or even filing for bankruptcy.
Bankruptcy Code requires courts to maintain a list of state-approved debt counseling services and personal finance teaching courses. An ACCC debt advisor cannot help you secure a consolidation loan as ACCC does not provide these services. You don’t need bad or fair credit to qualify for counseling, and you don’t have to wait until you’re struggling with debt to get debt counseling services. It’s also worth noting that working with debt advisors won’t negatively impact your ability to qualify for new financing.
Credit advisors are certified professionals who have been trained to help individuals manage their debt and improve their financial literacy.
References:
- What Is Debt Counseling, and How to Get It - LendingTree
- 10 Things You Need To Know About Debt Counseling
Barry Ritholtz is a renowned finance expert, author and blogger. With over 30 years of experience in the financial industry he has gained a reputation as a thought leader and influencer in the investment community.