Help with Nonprofit Credit Counseling

If you're mired in credit card debt, you know how hopeless your financial situation can sometimes feel. However, there may be a solution to your debt problems. Nonprofit credit counseling is an option that can help get you out of debt and give you your life back.

Credit Counseling Basics

Credit counseling does more than just give you someone to talk to about your credit woes. Credit counseling often results in a massive restructuring of your finances, usually through a debt management program. In most cases, the debt management program involves lowering your interest rates and may also result in re-aging your accounts to bring them current. The debt management program is administered through your credit counselor, who collects money from you and then distributes your money to your creditors on your behalf.

Credit Counseling Pros

One major benefit of credit counseling is that it's a fairly legitimate way to get yourself out of debt. Whereas other options like debt settlement and bankruptcy can destroy your credit, being on a debt management program doesn't hurt your credit rating. In addition, the program allows you the chance to build a history of on-time payments to your creditors. Lastly, most debt management programs are five or fewer years in length, which means you'll be able to look forward to a specific date at which you'll finally be out of debt.

Credit Counseling Cons

Unfortunately, credit counseling isn't a perfect option. One of the conditions of a debt management program is that you cannot apply for new credit while you're on the program. Furthermore, any cards included on the program can't be used and are often closed out by the creditor. Another negative point of debt management is that while you get better interest rates, you don't get any breaks in terms of your balances. In order to successfully complete the program, all of your balances must be paid in full.

Nonprofit Credit Counseling Agencies

If you're interested in pursuing credit counseling, it's important to choose the right agency. The ideal credit counseling agency is a nonprofit organization with a lengthy history. These criteria give the agency credibility, which is crucial if you're going to give this company a great deal of money over the next five years. You should also be cognizant of the fee charged by the agency; a credit counselor cannot legally charge more than $50 a month for its services. A fee in excess of this amount is a red flag that the company may not have your best interests at heart.