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Credit Counseling Information
Credit Counseling Services
If you’re struggling to manage your debts, then credit counseling can help you find a way out. Federal law now mandates that all bankruptcy candidates receive credit counseling before filing. However, credit counseling services can also help you long before bankruptcy becomes a possibility.
Although most people think of credit counseling as debt management or debt settlement, reputable credit counselors actually offer a wide range of solutions based on your specific situation. They’ll review your finances, advise you about budgeting, and devise a program to help you get out of debt.
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Credit Counseling Success Stories
See how credit counseling helped one person control her debt and improve her credit score.
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Credit Counseling Questions
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When do I need credit or debt counseling?
If you’ve fallen behind on your debts, avoid opening the mail, or are receiving collection calls, then you should consider credit counseling. You should also consider it if you’ve been turned down for a loan due to your credit score or debt load. -
Will it hurt my credit?
Credit counseling will appear on your credit report, but it’s not factored into your credit score. Lenders and creditors may be hesitant to issue new credit if the credit counseling is recent, but a bankruptcy or foreclosure will do far more damage. -
What does it cost?
The cost varies depending on the services you need. Most debt management plans include fees in the monthly payments or a one-time setup fee. The initial consultation should be free or very low cost – usually less than $50. Look for services that offer free educational materials, such as budgeting forms. If the fees seem unreasonable, investigate other services until you find one that works for you.
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Glossary of Credit Counseling Terms
Bankruptcy: A legal proceeding that may erase your debts, reduce your debts, or place you in a court-mandated debt management plan. The type of relief you receive depends on whether you qualify for chapter 7, 11, or 13 bankruptcy.
Collection Agency: A private company that buys debts from other businesses and then collects the unpaid balance from the debtor.
Consumer Credit Counseling Service: Organizations that help consumers find debt solutions. Options often include debt management plans. Most are nonprofit organizations that are actually funded by creditors.
Debt Settlement: A program that reduces your total debt owed. Credit counselors negotiate with your creditors to accept a lower payment as payment in full.
Debt Management: A program offered by credit counselors that enrolls all your debts, then negotiates with creditors for lower interest rates. You pay the counseling service, which then distributes the payments to the creditors.
Fair Debt Collection Practices Act: A federal law limiting the actions collection agencies may take when collecting a debt, and offers consumers protection against aggressive collection.
Grace Period: An interest-free period between the statement closing date and the payment due date. If you have a balance carried over from the prior month, the grace period doesn’t apply.
Average Mortgage Rates
| program | apr |
|---|---|
| 30 Yr Fixed | 6.17% |
| 15 Yr Fixed | 5.88% |
| 30 Yr Fixed Jumbo | 7.33% |
| 15 Yr Fixed Jumbo | 6.79% |
| 3/1 ARM | 5.98% |
| 5/1 ARM | 6.13% |
| 7/1 ARM | 6.34% |
| 10/1 ARM | 6.7% |
| 3/1 ARM (I/O) | 6.01% |
| 5/1 ARM (I/O) | 6.21% |
| 7/1 ARM (I/O) | 6.46% |
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