Credit Counseling Can Help You Create a Budget, But It Doesn’t Impact Your Principal Balances
Credit counseling won’t reduce the amount of debt you owe. They’ll work with you to create a strategy to manage your credit and pay off your debt. Sometimes it is paired with a debt management plan (or DMP), which may incur an additional fee, even if the it is done through a non-profit agency. There are many options for credit counseling agencies. It’s best to do your research and find one that is in good standing with the Better Business Bureau. You will also want to make sure that they are accredited by the National Foundation of Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).
If your credit counselor reviews your financial information and determines that a DMP is the best route for you, they will work with your creditors to negotiate payment terms that work within your budget, including lower monthly payments or lower interest rates. If your creditors agree to the DMP, you would send your monthly payment to your counseling agency and they would distribute payments to your creditors. The benefit is that your creditors would no longer be contacting you. The downside is that it typically takes between three to five years to complete the process. And, your credit counseling agency can require you to give up your credit cards until you’ve completed your DMP.
Note: Credit counseling firms are compensated by the credit card companies themselves.
They are paid a fee for your on-time payments. CBS News reports, “The biggest source of incomes for debt counseling services come from the credit card companies themselves. Creditors kick back a percentage of each monthly payment to the debt counselor. The credit counseling company wants to place you in DMP, so it can earn money from creditors.”
When you become part of our debt reduction program, your monthly deposits will be lower than monthly payments you were making.
Please note that all calls with the company may be recorded or monitored for quality assurance and training purposes. Clients who are able to stay with our debt resolution program and get all their debt resolved realize approximate savings of 50% before fees, or 30% including our fees, over 24 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Many factors are involved in debt resolution, making the experience and result unique for each individual. Not all clients complete our program for various reasons, including their personal circumstances, the individual’s ability to save funds, creditor and collection agency involvement and willingness to negotiate debt, and an individual’s perseverance to complete a debt resolution program. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. DebtBlue does not assume or pay any part of a client’s debt, does not provide legal advice nor offer credit repair. Debt resolution estimates do not consider potential tax consequences. DebtBlue’s Debt Negotiation Program is not available in all states. Please talk with us to ensure you understand our contract and contract terms before enrolling. By using this site, you acknowledge that you have read and understood our Terms of Use. DebtBlue does not discriminate on the basis of race, color, religion, sex, marital status, national origin or ancestry.