"Ignorance is bliss" never holds true in today's information age. Especially when you are in a debt you need to know everything about the process to get yourself out of the situation. Credit counseling is one of the options for debtors who have hard time paying off their debts. Some of the frequently asked questions are discussed in this article to help you gather some information on availing of credit counseling.
Credit counseling FAQ – Does it matter if I have a hardship?
The only sure condition under which you can avail of credit counseling is when you can prove that you have a hardship. When you have no income or no sufficient income and no money in savings and assets you can become eligible for credit counseling.
Credit counseling FAQ – What do credit counselors look for?
The ratio of income over spending is one of the most common aspects checked by the credit counselors. Advisors first check the ratio of your debts with your income and current expenditures. They will try to identify the source of the debt problem. They will analyze and compare the responsibilities and the monthly income of the debtor. They will then suggest a new budget specifying the essential categories. The consultants will propose options to quickly identify the elements or habits that created your debts and suggest strategies to change them radically. The counselor may ask you to cancel some credit cards to avoid repeating your borrowing trend.
Credit counseling FAQ – How do they help pay off debts?
The counselor will calculate the total credit you have. It is important to tell everything to your counselor as missing information will bring greater problems. Usually the counselor negotiates with the creditors to reduce the interest rates on the outstanding payments in order to reduce your repayment amount. The advisor will prepare a monthly payment plan in order to pay your debts on all your current credits. Once you accept the terms of this estimate, then it is sent to your creditors for approval. Once approved, you can start paying your single reduced monthly payment to the counselor who will then distribute the payments to all your creditors.
Credit counseling FAQ – Can I do the negotiations on my own?
Creditors may seem a little rigid and inflexible to the debtors when approached directly. An experienced counselor knows the tricks of the trade and can perform the act with ease. Since he is not emotionally involved in this issue he can argue and negotiate with a clear head. In reality, the creditors somehow want to close the account but might act tough initially. A credit counselor with no effort can break this ice for you.