What is credit advice?

credit counseling has become a popular alternative to the legal procedure known as bankruptcy. Since they continue to tighten federal bankruptcy instructions, more and more credit consulting services are setting up trade to help consumers manage their debts and bounce aggressive collection agencies. These agencies are designed as non -profit, which means that most client payments must be earmarked for repayment of debt. Credit consulting organizations can legally collect a small fee for administrative costs, but cannot benefit from collection or interest fees. It can only make minimal payments on credit card balance and lag for additional debts. Some of their creditors may have already initiated collection or other legal steps. Promoting bankruptcy in an effort to reorganize your debts may seem the only possible solution. However, bankruptcy proceedings remain in the credit record of a person for at least seven to ten years. Lawyers who specializeThey are bankrupt, they are entitled to a fee for their legal advice. Federal judges evaluate the ability of the debtor to pay and may require a substantial amount of the monthly income held by the administrator.

This is a place where a non -profit credit consulting service could provide a better alternative. The debtor can bring all the relevant documentation of his outstanding debts by a trained credit advisor. This advisor often works as a connection between credit card companies and their customers. Once the credit advisor has added all the outstanding balances and monthly payment obligations together, it calculates one payment to the credit consulting service that will deal with all creditors. Quite frequent -brewers are willing to accept these repayment conditions to avoid expenditure and dubious results of traditional collection methods.

, however, has some negative aspects. Credit cards can behave to be completely surrendered in exchange under the condition for repayment. The use of a credit consulting service can be as harmful to consumers as bankruptcy rating in Chapter 13. Some reckless agencies are in fact a non -profit expansion of businesses "for profit". Mony collected by a non -profit entity can be transferred to "for profit" accounts, not to actual debts. Anyone looking for advice on credit consultancy should view a set of better agency's business authority and ask the consultant's direct questions during the initial consultation.