Consolidating student loan drawbacks
If you make your new lower monthly credit card payments in your DMP for any significant period of time, and are suddenly unable to continue, you will have wasted time and money – both are a precious commodity in debt relief.
All of this detail should help you understand what credit counseling is, how credit counseling works, and whether it is an approach you can use to get relief from your debt.Mainstream media and financial pro’s waste the time of 70% of consumers they send to a credit counseling company.That waste is also enjoyed, at the same rate, by the credit counselors picking up the phone on the other end.If you agree to a monthly consolidated payment and start working with a credit counseling agency, but you later are unable to pay on time, you can lose the benefits you get from being enrolled in the plan.After missing a payment to the counseling agency, you may be able to get a creditor to give you a second chance, but not all will. If you lose the lower payment benefit, you may find you are back where you started, but with somewhat lower balances owed on the accounts – depending on how long you were making payments.Credit counselors are certainly not trained to help you understand alternative and creative ways to manage collection accounts at the same time you are dealing with accounts not in collection. Knowing it won’t work for you means focusing on something that will.
Banks have preset criteria they give to the credit counseling companies who screen your income and budget to fit the lenders standards for payment and interest rate reduction. If you are only marginally suited to sign up for a credit counseling services debt management plan, or have a fluctuating monthly income that makes your monthly budget more like guess work, than credit counseling repayment plans may not be right for you.
Depending on how long an account went delinquent before enrolling with the credit counseling service, and whether your account was with a debt buyer at the time you started your DMP, missing a debt management plan payment may mean losing interest rate benefits and having them reapplied retroactively.
I do not advise enrolling charged-off credit card debts (typically accounts that are 180 days past due) into a credit counseling service unless, or until, there are more conforming account treatments when accounts are already placed with outside collectors.
The counselor you speak with is pretty much only going to offer details about what a debt management plan will look like for you.
They are not allowed to cross into other debt solution territory like bankruptcy and debt settlement.
The nonprofit debt consolidator helps you pay your full balances back to creditors, which is the right thing to do when that effort does not cause harm to you or your family.