Credit counseling, despite its name, is more a type of debt management counseling. Rather than helping people use their credit, it helps people manage their current debts and, frequently, avoid filing for bankruptcy. While it is frequently seen as a type of credit education, it is really debt counseling.
The procedure of credit counseling involves a debtor creating a debt management plan (DMP). The DMP will be drawn up by a credit counselor who works with a consumer/debtor’s creditors to negotiate a repayment plan. Frequently, these plans will involve a lower interest rate or longer time frame than the debtor would have if he or she worked from the original loan or statement. In addition to reducing the interest rates, a DMP will often offer reduced payments and fees.
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Options Other Than Bankruptcy - Credit Counseling
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