Hi there, I want to talk about credit counseling with some cautions or warnings about whether or not you should even go down that path. Sustainability of credit really boils down to being able to qualify your monthly income with all your bills. The bills are enrolled like credit cards. Then added up, and two percent of that total will be your monthly payment. So it's resonably simple math.
If you commit to that plan you are going to be spending money, and looking at resources for that path over a four or five year period. So if you're only marginally suited to a credit counseling service, and you got twenty thousand dollars for the debt two percent of that will be your new monthly payment, which is four hundred dollars. That is really thin if you're not saving money every month for emergencies. Keep in mind, you won't be using credit cards anytime soon. They will be closed due to your enrollment in the program.
You have to be prepared for the future ahead. Because six months down the road if you've paid $400 a month you've paid twenty four hundred dollars. Let say in month seven something does occur, and you're not prepared for it. Then you miss a payment on your credit counseling plan. This will cause your debt management plan to lose benefits.
The interest rate concessions that the creditors granted you. Now your lower payments are no longer sufficient to meet the obligation, and the plan falls off the rails. So what just happen? Well you wasted six months on an answer that wasn't progressing to work for you. The alternative to this is to use the $2,400 for bankruptcy.
The average national cost of bankruptcy, which includes attorney's fees, and court costs. This would be about eighteen hundred dollars if you're in one of the coastal cities. It could range to two thousand twenty one hundred. Sometimes it's lower in some of the Midwest, and the smaller municipalities. If you do file for bankruptcy, chapter seven the debts are gone, and you get that fresh start.
Everybody needs to avoid bankruptcy! Sometimes it's the right decision to make. In this instance, if you fall off your credit guidance plan you may have to file for bankruptcy. And probably once six months past you'll been three months ahead. You would be recovering financially with that $2,400. Also you could have funded two more settlements.
Let's say you had $20,000 worth of debt and all of them five accounts, $4,000 balances. $2,400 might have settled one or two of your credit cards, and you're almost halfway to an answer that might have lasted 2 years. So it's important not to just do the math, but to project credit counseling results. Credit guidance is usually best for somebody that will meet that monthly payment.
Another caution with this is you will not want to enroll accounts that are past a certain level of delinquency. Advanced delinquency is typically charged off. It happens at about a hundred and eighty days of non-consecutive payments. So in six months if you've got accounts that are charged off they no longer can be reached.
One of the benefits of credit counseling.If you do enroll, and let's say it's with a debt buyer or something like that. And you fall off the plan. They might have to reduced your interest rate with an agreement that everything is going to get charged retro actively. If you fall off the plan, there is very little benefit to enrolling a charged off credit card, and other unsecured accounts into a credit counseling service.
Given the fact that life happens, and you fall off. Not only do you lose the benefits,but you probably didn't even have much debt. When you enroll in a charged-off account be very careful. Credit counseling agencies out there will just throw willy-nilly, and enroll accounts. Be careful of who you actually work with in a credit counseling service, because many of them do a lot of the same services, and not all of them are created equal.
I prefer Cambridge credit counseling, a national firm that does outstanding work. They publish all their data, and success rates.
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