Credit Debt Counseling

A credit counselor typically provides services such as budgeting, debt management, credit counseling, financial education, and assistance with creating a plan to repay debt. They may also negotiate with creditors on your behalf, help you understand credit reports and scores, and provide guidance on how to handle credit responsibly.

Credit counseling can help improve your credit score by providing you with education and tools to better manage your finances and debt. A credit counselor will work with you to create a budget, develop a debt repayment plan, and provide guidance on how to handle credit responsibly. They may also negotiate with creditors on your behalf to lower interest rates or set up a debt management plan, which can help you pay off debt faster and improve your credit utilization. 

Credit counseling can help you consolidate your debt. A credit counselor may recommend a debt management plan (DMP) as a way to consolidate your debt and make your payments more manageable. A DMP is a repayment plan in which a credit counselor works with your creditors to lower or eliminate interest rates on your accounts. In return, you make one payment to the credit counseling agency, which then pays your creditors. This can help simplify the debt repayment process, as you only need to make one payment each month, and it may also help reduce the overall amount of interest you pay on your debt. Another way credit counselors may help you consolidate your debt is by providing resources, advice, and guidance to consolidate your debt via a loan or balance transfer.

The cost of credit counseling varies depending on the agency and the services provided. Some credit counseling agencies may charge a one-time setup fee, while others may charge a monthly fee or a percentage of the debt enrolled in a debt management plan. Some credit counseling agencies may also provide services for free, or on a sliding scale based on income. It’s important to ask about fees and costs before starting any services with a credit counseling agency.

Participating in credit counseling may have a short-term effect on your credit score, as it will be noted on your credit report that you are enrolled in a debt management plan. However, if you make your payments on time and follow the plan as agreed, it can have a positive impact on your credit score in the long term as it will help you pay off debt faster, lower your credit utilization, and improve your overall credit behavior.

The credit counseling process typically takes several months to a year, depending on the amount of debt and the specific plan agreed upon. The credit counseling agency will work with you to create a debt repayment plan and negotiate with creditors on your behalf. It can take time for the changes to be implemented and for payments to be made under the new plan, but the duration of the credit counseling process is also dependent on the individual’s financial situation and ability to stick to the plan.

Credit counseling and debt consolidation are related but different. Credit counseling is a process where a credit counselor works with an individual to help them better manage their finances and debt, typically through a debt management plan. Debt consolidation, on the other hand, refers to combining multiple debts into one single debt, often through a loan, a balance transfer credit card, or a home equity loan. Credit counseling may include debt consolidation as a strategy but it’s not the only service that credit counselors provide, they also provide financial education, budgeting, assistance with creating a plan to repay debt, and negotiating with creditors.

You can get credit counseling assistance online or over the phone. Many credit counseling agencies offer virtual or telephonic counseling services, which allows you to receive assistance from the comfort of your home. Online or phone counseling sessions typically involve the same process as in-person counseling, including creating a budget, developing a debt repayment plan, and providing guidance on how to handle credit responsibly. It’s important to verify the agency’s accreditation, certifications, and membership in professional organizations before you start working with them online or over the phone.

 Kunjar Sharma & Associates Inc. offers services for free or on a sliding scale based on income. It’s important to inquire about fees and costs before starting any services and consider free options.

Kunjar Sharma & Associates Inc. can help you to identify and address any underlying financial issues that may be negatively impacting your debt situation. With a structured plan, the right guidance, and sticking to it, credit debt counseling can help you to get out of debt.

Credit debt counseling will not stop collection calls and lawsuits by itself. However, when you enroll in a debt management plan, your credit counselor will negotiate with your creditors on your behalf, which may result in a reduction or elimination of interest rates and penalties, and a more affordable payment plan. Creditors also may agree to stop calling and suing if you are in a debt management plan, but it’s not guaranteed and it depends on the specific agreement made with the creditor. It’s always important to communicate with your credit counselor if you are still experiencing collection calls or lawsuits after enrolling in a debt management plan.