The credit counseling industry spends millions advertising their services to consumers to assist with debt. Their high profile appearance on sporting events broadcasts and other media make them look like a great option. Unfortunately, for most people in financial trouble in the Salt Lake area, credit counseling merely delays the inevitable.
Typical credit counseling services assess the consumer situation and set up a payment plan. The consumer starts making monthly payments to the credit counseling agency (a substantial portion of which goes toward the agency’s fee) and after a number of months there is enough money to start negotiating. The credit counselors then make contact with the creditors to negotiate a settlement until they get one creditor willing to settle. They then pay this creditor with the accumulated funds and move on to the next creditor after more money has been paid.
Unfortunately, during this lengthy time period all creditors are free to continue collecting the debts, including taking legal action against the consumer. Because they have to wait so long, the creditors who aren’t one of the early ones to be settled with typically grow impatient and sue the consumer. This then leads to the entire debt consolidation plan failing.
In the meantime, the consumer’s credit score has continued to get worse. It’s not until a consumer actually completes the settlement with all creditors that their credit score can begin to rebound. Because so many consumers fail to complete this plan, the credit counseling usually ends up being an expensive way to delay fixing debt and credit problems. There are some cases where credit counseling works, but that is usually where the consumer has sufficient income for their debts, just needs a little help managing their finances.
A large number of people in the Salt Lake area who seek credit counseling would be wise to meet with a qualified bankruptcy attorney for a free consultation to see whether bankruptcy would be a better and faster solution to their debt problems. We can usually get people in a position to buy a home or other major purchase much faster than a credit counseling process can.