If I have five credit cards that are current, two that are behind and one that’s charged off and in collections, is credit counseling for me? If so, can I enroll all of the accounts that are still will the original creditor and then settle the collection account separately?
Jaqueline G. in Miami, FL
Multiple Credit Cards in Various States of Delinquency
Is delinquency the only time a consumer should seek financial counseling? Find out what makes someone a perfect candidate for debt management.
[On-screen text] Multiple credit cards in various states of delinquency
The scenario that you’re describing with multiple credit cards in various states of delinquency actually makes you more of a perfect candidate for a debt management than somebody who is delinquent on everything or current on everything.
It’s a challenge for any individual consumer to juggle multiple accounts in various states of delinquency. That’s exactly why debt management was created to keep you from falling behind on your current accounts that bring past due accounts current.
Basically to manage whatever money you have left over at the end of the month, allocate it in a way that gets you out of debt with all of your creditors. Not just the ones that are calling, harassing you and collecting. And not just the ones you’re current on.
We want to try to get you out of complete debt from everyone you owe money to.
Is credit counseling right for me?
Searching for debt relief is exhausting and can leave you feeling like you have nowhere to turn. You may have considered a balance transfer, debt settlement, or even bankruptcy. You may feel unsure about which path to take.
If this feels familiar, credit counseling may be right for you. Calling a credit counselor and getting a consultation is a great way to kick-start your journey toward debt relief. A credit counselor can help you review all of your options and decide which method is best for you.
What happens in credit counseling?
Credit counseling is designed to help you find the solution for your debt that fits your needs. A certified credit counselor will evaluate your debt and budget to see where you stand. Then, they will direct you toward the option that makes sense for your financial situation.
If you stick with the credit counseling agency for your debt relief, you will enroll in a debt management plan (DMP). In this program, a credit counselor will consolidate your debts into one monthly payment to the credit counseling agency.
Credit counseling can also go beyond helping you find debt relief. Their financial counseling services are meant to set you up for a financially stable life even after you pay off your debt. Especially if you work with a nonprofit credit counseling agency, there will be many free personal finance resources available to you.
What kinds of accounts can I pay off through credit counseling?
When you enroll in a debt management plan through Consolidated Credit, you get to choose which accounts you consolidate and which accounts you pay off on your own.
For example, Jacqueline G. asked if she could enroll all of the accounts that are still with the original creditor and then settle the collection account separately. This is definitely possible. You choose exactly which accounts get enrolled in the program and you can handle the other accounts however you want. In most cases, your counselor will recommend that you include all of your credit cards in the program; however, you have the ability to leave one card out for emergencies. Collection accounts are entirely up to you.
You may be a good candidate for credit counseling if…
You have trouble juggling multiple accounts.
It can be hard to keep track of multiple debts with their various interest rates. Getting tons of credit card bills every month is never easy, especially when you’re behind on some or all of them. Credit counseling helps you find the best way to consolidate your debts into one monthly payment.
You want a lower monthly payment.
Working with a credit counseling agency may help you lower your monthly payment on your debts. On average, a debt management plan lowers people’s total credit card payments by up to 30-50 percent.
You don’t want to deal directly with debt collectors.
Are you constantly getting calls about how much you owe? Do you wish you could stop dealing with collectors altogether? Credit counseling can help you with that. When you go through a credit counseling agency to find a way to eliminate your debt, it’s likely that you won’t hear from collectors directly again. If you do, you can tell them that you’re working through a credit counseling agency and would prefer that they contact the agency instead of you.
How will credit counseling affect my credit score?
Credit counseling itself will not affect your credit scores at all. The debt relief option you choose after undergoing credit counseling may affect your scores. Debt management programs, which can be completed through the credit counseling agency, don’t affect your score as harshly as debt settlement or bankruptcy.
Talk to a certified credit counselor today to weigh your debt relief options.
