Should I Consider Credit Counseling?
Credit Counseling is advertised regularly on radio and T.V. It offers for an individual or family that just cannot pay all of their bills the opportunity of sending a single payment each month to the credit counseling company for them to forward your payment to each of your creditors. Often the counseling firm will be able to negotiate a settlement of less than you owe or a lower interest rate. Naturally, this is very good. However, (you knew there was a however coming!) you only want to go this direction if there is no other way to go other than a bankruptcy. Take a very hard look at your budget. You want to do everything you can to solve your bill paying problems on your own.
Why Should I Not Go To Credit Counseling?
If your credit report shows that you have turned over to a credit counseling firm most or all of your monthly payments, any investor underwriter that is looking at your file will assume that you are one step away from a bankruptcy and will treat your file as if you have already filed for bankruptcy. Unfair? Yes, but that’s the way it is in most cases. So, you really don’t want that perspective from someone making the decision on your loan application. Second, when you pay the counseling company, they will take a day or two or three or more to forward your payments to your list of creditors. We have observed that this process often makes your payments late, and that is what you were trying to avoid in the very beginning. Of course, a late payment brings your credit score down even further.
So, What Should I do?
Sit down and create a realistic budget. Take the funds you have each month and payoff the smallest accounts first while you continue to make minimum payments on time on all of your other accounts. Then take the amount from the first paid off account and add it to the payment on the next account, and so on. Naturally, you do not want to add to any of your credit card balances with additional purchases since that is defeating your purpose. Discipline yourself and stay the course. It will take time, but it can be done and you will feel absolutely GREAT. Life is way to short for you to be handcuffed by your debt. Start today, it is never too late.
Peter M. Galde is the founder and principal at Cornerstone Capital Funding, 14520 Mono Way, Suite 110, Sonora Ca. 95370. Peter has 28 years experience in the finance industry. E mail Peter or call him on 209 532 7711 for further information.
