An Overview Of The Credit Counseling Service

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                                       An Overview Of The Credit Counseling Service
                                                                 By Jay Ashley



   A credit counseling service, otherwise known as debt counselling in the United Kingdom, is the
service that offers to educate consumers on techniques used to avoid incurring of debts that could not
be repaid. People who avail of credit counseling services are usually those who are in grave need of
debt relief or those who need to avoid being indebted further.

Credit counseling also entails negotiations with creditors to create a DMP (debt management plan) for
the consumer. The DMP helps a debtor to repay a debt by defining the a repayment scheme with the
particular creditor. Credit counselors usually work out DMPs that allow consumers to reduce their
payments, interest rates, and fees, so that the clients would be able to managed their debts easily.
Creditors dictate the terms to be worked on with the DMP and the credit counselors base debt
management plan on these terms to determine the reductions in interests and payments to be offered
to the clients.

How Credit Counseling Service Began

The first credit counseling services were first offered by grantors who formed the National Foundation
for Credit Counseling (NFCC) in the United States in 1951. The foundation aimed to help prevent
bankruptcy among consumers by promoting financial literacy. By 1993 the AICCCA (Association of
Independent Consumer Credit Counseling Agencies) was created in response to the need for
standardizing ethical conduct and excellence in the industry of credit counseling. The AICCCA, which
was the first competitor of NFCC, revolutionized the credit counseling service by introducing a phone
delivery system of programs for debt management. While many, particularly the NFCC, were opposed
to this system, the system caught later on and became practiced alongside face-to-face or personal
counseling. Some years after, the AADMO (American Association of Debt Management Organizations)
was formed, and is now the largest among the leading trade organizations.

While many credit counseling service providers are members of trade organizations, agencies are not
really required to join an organization. As of now, there are more than 1,000 existing credit counseling
agencies in the USA. The credit counseling service has extended to other continents as it is also now
growing as an industry in Europe for both profit and non-profit firms and organizations.

Credit Counseling Service Criticisms


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The credit counseling service faced much criticism during the late 1980s and the early 1990s. The
existence of some creditors in the Board of Directors of NFCC induced suspicions of monopolistic
practices. By the early 90’s the occurrence of abuse by credit counseling agencies increased, raising
questions regarding the industry as a whole. There were also questions raised regarding the means
upon which credit counseling agencies receive compensation, which is usually from the distribution of
creditors’ debt collections; this led to allegations that the credit counseling service is just a means of
collection for creditors.

Because of such criticisms mentioned, together with those not mentioned, the industry of credit
counseling is expected to face an enduring change because of the scrutiny forwarded by both the
consumers and the government regulators regarding how the credit counseling service should be paid.
This poses a great threat to the many debt-ridden consumers who are left wanting of new ways to
alleviate their situation.

Whether the credit counseling service is questionable or not is still subject to debate. However, many
find its cause still very much worthwhile. Perhaps the industry needs more time to define certain things,
in order to come up with a sounder system in keeping people from succumbing to debts.

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For more information on credit counseling service checkout http://123creditcounselingservice.info.




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                                             Can Credit Counseling Really Help?
                                                          By Dave Robinson



 If you have high debt, and are in trouble, you have probably heard the term “credit counseling,” but do
you understand what it is? Oftentimes this term is used in the same sentence as debt negotiation or
debt settlement, but actually, it’s a completely different process. With credit counseling, you will
actually work with a professional credit counselor to pay off your debt in lower, monthly payments that
you can afford.

The people most likely to need credit counseling are those who are receiving troubling phone calls
from bill collectors, or whose accounts have gone to collection agencies. If you think that you may
benefit from using a service like this, please read on to find out the best way to work with a credit
counseling company.

First, you’ll need to be able to find a good credit counseling company, and not fall victim to one of the
many credit counseling scams that are out there. Start by avoiding any ads that promise you quick
fixes for your credit report. There is no such thing. Instead, look for a reliable company that is
accredited by Consumer Credit Counseling Services.

Next, you’ll have to meet with a professional credit counselor, and provide them with all of the details of
your debt. Don’t be tempted to leave anything out because they will need the information in order to
create a re-payment plan made just for you.

Now, you can sit back and allow your professional credit counselor to work for you. They will contact all
of your creditors and inform them that you are trying to create a plan that will allow you pay off your
debts. They will work with them all and coordinate a re-payment schedule that you can live with. Many
times, they will be able to lower your interest rates in order to allow for lower payments.

Some credit counseling services offer a debt management system. What is it? Instead of having to
keep up with all of the payments yourself, you will have the option of submitting one lump sum
payment to the credit counseling service and they will do it for you. One note of caution here: there
have been instances of a credit counseling services paying their client’s payments late, and if that
happens, your credit report will suffer for it. Knowing that, be sure to check out the company
thoroughly, by checking references, before signing up for their debt management program.

What will you pay for all of these services? A reputable Credit Counseling Service will only charge you
a small fee, somewhere around fourteen dollars per month. If they are asking for alot of money up
front, they may not have your best intests at heart. Be on the look out for potenial scams.

You should also be aware that working with a credit counseling service can do some damage to your
credit report. However, the good does out weigh the bad. After all, it’s much easier to explain an honest
attempt to get your finances in order than it is to explain a bankruptcy or a credit report full of
charge-offs.



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resources. http://www.my-credit-report.info This article is copyright 2005, but can be freely reprinted, as
long as no changes are made, including hyperlinks.




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