Credit Counseling

Credit card debt can be one of the most stressful and time consuming obligations a consumer can have. The benefits to debt consolidation has helped millions of people in becoming debt free. Consolidate debt has help thousands of consumers through traditional debt management programs each year. The debt consolidation programs is the process of having one monthly payment instead of several on active credit card debt. This is often done to obtain a lower interest rate, a lower payment and getting out of debt in months not years. These programs and the benefits to them were provided from the creditors for the consumer.

How the proposal process works

The program is often referred to as either debt management or credit counseling services if searched for online. By enrolling into a program such as this, the consumer elects to pay the monthly payments to a third party processing agent which redirects the payments to the credit card companies on new terms. Prior to payments being sent out, the nonprofit sends out a proposal which is required. The proposal process takes about a week or two due to it being done by US Mail.

Repayment plan and reduction

This type of repayment plan can help a consumer out dramatically. The average minimum payment ranges from 2% to 3%. If a consumer is not making at least 6% to 9% in minimum payments, a repayment plan such as this should be heavily considered. Although the minimum payment reduction is not one of the key reasons for enrollment, the interest rate question is. The minimum payment usually gets reduced 10-20% however, the interest rates are usually below 10%. If delinquent with the credit cards, after a few consecutive payments they tend to re age the accounts to a current status. So given your behind a month or two, and they now want two or three times the minimum plus fee's - consider debt consolidation.

The topic of accounts and their status

When entering a debt management program, the creditors do not close the accounts but will put them on hold.  When the creditors issue such significant benefits to its customer, they don't want that customer running up new debt on these new rates. This is only common sense and is a small price to pay for consolidation enrollment.

No collateral is needed for enrollment

The debt management program does not require home ownership or a credit check. If you were considering a loan to resolve the debt, understand that a debt consolidation loan typically requires collateral in the form of property. This is often a home or mortgage. When going about this route, the consumer will turn perfectly unsecured debt into secured debt which in turn puts the consumers home at risk. It's highly recommended to not go about this route when trying to resolve credit card debt.

At times, credit counseling programs can reduce or even eliminate late, limit or finance charges. These programs were created to remove the debtor from the possibility of bankruptcy. Unlike debt settlement, debt elimination or debt negotiation this program is not factored into the consumers credit score.

The debt consolidation programs are often recommended for those whom have active credit card debt, yet feel their getting nowhere by self made payments. Unsecured debt can carry a much larger interest rate than most loans. Most consumers make pointless minimum payments each month with the hopes that the balances will go down. With this said, this route to resolve open revolving debt can be very beneficial to consumers.

Another benefit to the program is the interest rate reduction. Although the average interest rate for consumers is 19%, an interest rate below 8% is a strong possibility. When consumers decide to make minimum payments on their own, they say it takes an estimated two years for every thousand dollars owed in payback.

Furthermore, another benefit to the program is the re-age process for delinquent accounts. This is referred to as the re-aging process. After the consumer makes a few payments, that is when this is done.

Credit counseling is offered nationwide. To qualify for this program, consumers must have at least $3,000 in unsecured debt and have an average interest rate of at least 12% or greater.

Additional resources to credit counseling:

• Nonprofit debt consolidation
• Debt consolidation program
• Debt consolidation benefits