Will Credit Counseling Help You?
In Arkansas and across the country, more and more people are faced with credit cards and other unsecured debts such as store cards, gas cards, medical bills, doctor bills and more. If you're in debt, you may be seriously considering credit counseling or debt consolidation. In fact, if you are considering bankruptcy due to a serious level of debt, it's now required that you first undergo credit counseling.
The objective of any consumer credit counseling program is to "consolidate," or combine, the entire amount of a consumer's debts into a single, more affordable and manageable monthly payment. Through the benefits of debt relief, such as lower interest rates and the waiving of late fees and penalties, a debt management plan (DMP) coordinated by a credit counselor or debt counselor can help consumers get out of debt quickly and, quite possibly, save a substantial amount of money as well.
If you are experiencing a financial hardship and need to explore your debt relief options, you can get your free debt relief evaluation and savings estimate at no obligation.
How Does Credit Counseling Work?
Certified credit counselors or debt counselors work with credit counseling agencies and provide a number of helpful debt relief services for individuals and families. Such services include assessing an individual's unique debt circumstances, budgeting, financial education, and in many cases, providing you with the tools to help manage your finances and move toward the dream of financial independence and a future without debt.
Debt Management Plans
Credit counseling agencies may also help provide debt relief by working with debtors to establish a debt management plan, also known as a DMP. Debt Management Plans could provide debt relief by:
- Reducing interest rates
- Lowering monthly payments
- Waiving of late fees and penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping you save substantial money and allowing you to get out of debt in less time than you could on your own if you didn't have the benefits of lower interest rates and continued to pay only monthly minimums
Could Debt Relief Help You? Get your free debt relief analysis and saving estimate.
Debt Relief Alternatives
Many Arkansas residents have been helped by credit counseling. While it is a tried and true method of debt relief, it's important to remember that debt management also requires basic financial discipline and restraint to avoid using credit cards. It normally takes three to five years to complete the program and realize the full benefits of debt relief. On the other hand, debt settlement is a popular alternative to debt management. It is a more aggressive form of debt relief that could help you get out of credit card debt at an accelerated rate, but you typically accumulate money in a separate account that can later be used to extend a settlement offer to creditors.
Debt settlement allows credit card companies to recoup at least some of their losses. Credit card companies sometimes opt to "sell off" your debt to a collection agency as "bad debt," leaving the creditors with as little as 10 cents on the dollar. A reasonable settlement offer made by you or by a debt settlement company on your behalf will allow credit card companies to collect a larger amount.
It is critical that consumers adhere to the terms of credit card agreements made to set money aside in a settlement fund. Any default on the terms may result in creditors threatening or taking legal action. Also, money saved through credit card settlements is subject to federal taxation. Finally, debt settlement will usually have a negative impact on personal credit, but the impact will be significantly less than that of personal bankruptcy.
Debt relief programs have been known to help many consumers during financially challenging times, but some consumers may need more immediate or possibly short-term relief, such as help paying for rent, utilities, child care or even buying groceries. The state of Arkansas has a variety of financial assistance programs available, such as the Low Income Home Energy Assistance Program (LIHEAP), Medicaid, ARKids First! Program, which provides affordable health insurance for children, and a variety of food assistance programs. To learn more, visit the state of Arkansas' official Benefits page.
To see what debt relief could do for you and how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited debt relief provider who may assist you.
Before you enroll in any debt relief program, it is important to clearly understand how much you can potentially save with debt relief, how long it will take to realize those savings, and the impact that any debt relief program might have on personal credit and taxes.
To learn what debt relief could do for you and get an estimate of how much you could potentially save - take a moment to answer a few questions online. Get your free debt relief estimate and savings estimate today.