A debt is perhaps the most worrying concerns that affects an individual. Ignoring debt only multiplies it with the interest factor and ultimately it gives rise to a heap of accumulated burdens which simply engulfs and individual. There are two simple solutions to get out of this debt obligation. a) Filing a Bankruptcy b) Repaying the debt by any means. In the opinion of many, filing a bankruptcy is a convenient way of out this problem. But filing bankruptcy has some deadly consequences in an individual’s financial wellbeing. It is recommended to go through a credit counseling session before filing bankruptcy. Credit Counseling, sometimes referred as debt counseling is a process whereby the financial standing of an individual is being assessed with regard to assets, liabilities, monthly income and expenditure. The total amount of outstanding debts coupled with their interest is calculated, provision is made for necessary monthly expenditures and a repayment plan is chalked out. After the plan is being made, the same is sent to each of your creditor for approval. Once it gets approved, you are required to pay a monthly sum of money to the credit counseling agency that in turn pay the same to your respective creditors. Contrary to the popular belief availing a credit counseling service doesn’t lowers one’s credit score. The fact that you are availing the services of a credit counseling agency may be mentioned in your credit report but that doesn’t in anyway undermine your score. However some lenders may consider it as a negative mark in the report and might be reluctant to extend you further credit. Again, some creditor might see this as a kind of positive initiative on your pat to repay your outstanding liabilities. Whether credit counseling would affect your credibility as a borrower depends entirely upon the sweet will of your lender. Before you go for credit counseling, one should be careful about the selection of the agency. * While a good number of companies claim to be non commercial, chances are that they retain a part of your regular monthly payment before making the final payment to your creditor. * Even if the nature of operation s commercial in nature, they shouldn’t be charging you more than $50 a month. As per the guidelines of ACCC, a credit counseling agency should charge minimum amount to their clients. Though the rate varies from one state to another, normally the credit counseling agency shouldn’t charge you more than 20% of your total monthly payment. * All the counselors of your credit counseling agency are required to have professional certification. * Trust is an important factor that has a major role to play while deciding a credit counseling agency. If your counseling agency is in business for more than five to seven years, there is no reason why you can’t place trust on them. On the other hand if the agency in quite new in business, it is advisable to make doubly sure that it does not have any complain filed against them in past. It is better if you put a check through the records of Better Credit Bureau and get an idea about them. Availing credit counseling session has been made mandatory requirement as per Bankruptcy Law, 1998. However, in any case you are dissatisfied with the services of your credit counselor; you can seek the help of Better Credit Bureau to share you grievances.
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