Negotiating Credit Card Bills – Part One (Credit Counseling)
With credit card bills getting the best of many consumers we thought it would be a good idea to run a three-part series in which we would discuss various options consumers have as far as credit card negotiations go.
Credit card delinquencies are now at an all-time high and unemployment is still in double digits which means people across the United States will continue to struggle to pay their bills.
We decided to make this a three-part series because there are basically three options that cardholders have when it comes to credit card debt negotiation.
We will start our series by listing the first option; speaking with a credit counselor.
Credit Counseling Services
Finding a credit counselor is not at all difficult. In fact, there are more and more credit counseling agencies going into business to meet the ever-increasing demand.
You can find one in your area by going through the National Foundation for Credit Counseling which can be found at www.nfcc.org.
What you’re looking for in a credit counseling service is a nonprofit agency that has professionally trained counselors that are experienced with helping people that find themselves with credit card debt that they can no longer afford.
Credit counseling services work directly with credit card companies through pre-existing relationships to cut or even eliminate interest rates on your credit cards.
In addition, they also eliminate late fees and work out a monthly payment amount that is affordable. There can and usually are nominal fees involved. Credit counseling services are also funded by the creditors themselves and by grants.
The program works with the debt management service, or credit counseling agency if you prefer, negotiating directly with all of the credit card companies that you owe money to.
The consumer will then make a single payment to the credit counseling service once a month and they will in turn distribute payments to each and every one of the creditors based on the previously agreed-upon amount.
These are basically debt management programs and they usually last between 4 to 5 years. All credit card accounts are closed immediately and can no longer be used regardless of how much of a line of credit that may remain and any single card.
As far as how this affects your credit history; being in the program will be noted on your credit report and the credit bureaus will be notified as well.
However, as long as you stay on the program in good terms and monthly payments are made on time it should not have a negative effect on your credit score.
Note that credit card counseling services, also known as credit card debt consolidation, is different than debt settlement and debt reduction in that the cardholder is still paying the entire amount of what they owe.
The savings comes in the form of reduced interest rates and elimination of late fees.
This option is the most desired because there is no ill effect on the consumer’s credit rating.
In part two we will talk about how debt settlement works and what an individual should expect to see if they were to enter into an agreement with a debt settlement company.
Related Information:
- Negotiating Credit Card Bills – Part Three (Debt Negotiation) Get our timely advice on how to negotiate credit card debt. Find out how you can save money by negotiating with your creditors....
- Negotiating Credit Card Bills – Part Two (Debt Settlement) Learn about how debt settlement can benefit you....
- The Rising Tide of Fraud Committed by Debt Settlement Companies Be on guard for fraudulent debt settlement companies. We show you what to look for....
- What Are The Signs Of A Trustworthy Debt Consolidation Agency? Find out exactly how to check a debt consolidation agency to make sure they are legitimate....
