title:A Guide to Consumer Credit Counseling author:John Mussi source_url:http://www.articlecity.com/articles/business_and_finance/article_5998.shtml date_saved:2007-07-25 12:30:07 category:business_and_finance article:

When debt begins to build up uncontrollably, it may seem as though the only way for you to get out of debt is to file bankruptcy and deal with all of the negative repercussions that come with it. Luckily, there is another option? in many cases a service known as consumer credit counseling can help you to avoid bankruptcy while eliminating your debt and getting you back to where you need to be in regards to your credit.
A variety of consumer credit counseling services have come into being within the past several years, and so long as they continue to provide services that help individuals avoid personal bankruptcy, it seems that there will be a need for these services for some time to come.
What Is Consumer Credit Counseling?
Consumer credit counseling is a method for resolving the debts of an individual without filing for bankruptcy, using a third party to negotiate settlements with creditors and to assist in budgeting money for debt repayment. Consumer credit counseling services don’t issue loans or offer any sort of repayment themselves; they simply help you to manage your money so that you can repay your own debts, while at the same time working with your creditors in an attempt to get them to reduce the total amount that is owed. This allows you to pay a reduced amount, while it allows your creditors to avoid the additional expenses of collection attempts and possible court costs.
How Do Consumer Credit Counseling Services Work?
Consumer credit counseling services operate in two ways… they are either non-profit organizations that operate off of government grants, or they are for-profit organizations and charge a nominal fee for their service. Regardless of how they make money, the core of the service that is provided remains the same; negotiation with creditors (many of whom they already have contacts with) and assisting individuals in debt with their budgeting and repayment. Depending upon the amount of money that is owed, some people can get through the credit counseling service rather quickly and have all of their debts reduced and repaid. Others may find themselves taking several months or possibly a year or more to repay their debts, even after negotiations reduce the total amount owed.
The time spent doing so is usually worth it, however, as the individual who spends a year or more would likely have no other option aside from bankruptcy if they had not chosen credit counseling.
Avoiding Consumer Credit Counseling Scams
As with most services concerning money, there are those who will try to present themselves as consumer credit counseling services in order to scam money out of individuals who are desperate for a way out of debt. These scams usually present themselves as offering instant debt relief or claim that they can cancel debts that you owe for a fee. What they usually offer, however, is a business tax ID number to replace your personal ID. The worst part of this is that it is usually legal for a business such as theirs to request a new tax ID number, but should an individual use it in an attempt to gain personal credit they are subject to fines and possible criminal charges.
Before signing up with any debt relief service, it’s important to check out their background and obtain references if possible? especially if they charge large fees for their services or claim to offer instant results.

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