Advantages and Pitfalls of Credit Counseling

Credit counseling services receive a lot of mixed reviews. 

There are many reputable services, but there are also credit counseling companies with horrible reputations. Credit counseling is now required before filing for bankruptcy. 

If you want help with your debt, you must be aware of the advantages and disadvantages of using a credit counseling company.

Positive Features of Credit Counseling 

• They tend to have more clout with creditors. Some creditors are more willing to negotiate pay-offs and payment plans with credit counselors. You might get a better deal and more breathing room with a credit counseling service. 

• It’s possible to consolidate your payments. Many firms will consolidate your payments into one payment each month. You’ll be making a payment to the counseling company. Understand that the credit counseling firm must then make all the individual payments for you.

•  It can be easier to get new credit. As part of your credit counseling, it’s common for new credit to be secured for you. They’ll go out and work to have your credit applications approved.

• An end to the harassment. When you’re put on a repayment plan, the debt collectors will leave you alone. Remember that you can do this yourself by simply making a request in writing.

A reputable and honest credit counseling service can be helpful. There are many potential advantages to utilizing the expert assistance they can provide. But there are also several possible negative consequences.
 

Pitfalls of Credit Counseling

• They might not actually pay your bills. There are many complaints every year of credit counseling companies taking your money and then failing to make the agreed-upon payments to your creditors.

• They often over-promise. Just like any other company vying for your dollars, sometimes the marketing is a little too good to be true. After the counseling company takes their cut, you might not be any better off.

• It can possibly make your credit worse. There is one tactic commonly employed that can have a negative impact on your credit score. The credit counselor may advise you to stop paying on your debt and instead put the payments into an account. Once a large enough lump sum has been accumulated, the counselor would then approach your creditors with offers to pay off the debt at a reduced amount.

During this process your credit will suffer due to the non-payment.

The account used to store the money is under the control of the counseling firm. Do you trust them? The potential pitfalls are serious. It’s very important to do the necessary legwork to locate a reputable credit counseling service.
 
Many consumers believe that a service with non-profit status must be reputable. Understand that being non-profit is primarily about not showing a profit at the end of the year. Paying bonuses and higher salaries can accomplish this feat.
 
Ideally, you’ll be able to find a counseling service in your state that you can visit in person. Checking with your state Attorney General is an effective way to see if any complaints or legal action have taken place. Doing an online search is also likely to turn up any negative reviews or complaints.
 
Inquire about the services offered and the fees. Ask how the employees are paid. Are they compensated more for signing you up for certain services? Get everything in writing. Verbal promises are likely to be conveniently forgotten.
 
Credit counseling can be beneficial or counterproductive to your goals of reducing and eliminating your debt. Find a reputable credit-counseling firm by doing the necessary research. Be sure your financial situation will move in a positive direction.

I put in the work and worked on my personal credit repair and my family's credit repair myself after we struggled financially during my eldest daughters cancer treatment. I didn't think I could do it myself but I had already experienced paying someone else to do it for me with no results a few years prior so I figured I would at least try and if it didn't work at least I didn't pay a scammer to do nothing for me. 

I used   my Econ's MyCreditSystem and I am really happy I did. I was so impressed with my results that I joined them as an independent agent. You can check out how that program works clicking on this link ---- myCredit System - myEcon

Post-Bankruptcy Credit Improvement

 

So you did that dreaded thing people call reputation suicide and you filed for bankruptcy now your credit is likely as low as it's ever been. But it doesn't have to stay that way. The moment you declare bankruptcy, there are actions you can take to immediately start rebuilding your credit. 

You are getting a fresh start and it's important to build a solid foundation of knowledge so you can avoid the pitfalls that led you to bankruptcy in the first place if it was poor personal financial management that led to bankruptcy in the first place. 

Here's how to start improving your credit score right after a bankruptcy event. 

Do a Careful Credit Report Check

 

Look over your credit reports. All three of them, Experian, TransUnion and Equifax. Then look them over again. Carefully check that each and every existing account is being reported properly in all three credit bureaus.

Old debts that were wiped out by bankruptcy should indicate a "BK" status. Debts that aren't reported properly can continue to damage your credit score, so make sure that any debts included in your bankruptcy filing are now "cleared debts" are indeed being reported properly.

 Pay Your Mortgage and Rent On Time

 

If you managed to keep your house in the bankruptcy process, make sure you do everything in your power to pay your mortgage on time. 

Your mortgage has a bigger impact on your credit than anything else. If you can manage to keep it current, that'll really help your credit score. If you go delinquent on your mortgage, the rest of the techniques in this article won't help all that much. 

If you are still struggling to make mortgage payments call your loan holder and try your best to refinance your mortgage loan. It's possible to refinance a mortgage after bankruptcy. If you are living in a rental PLEASE do yourself a favor and pay your rent on time! Your rental payment history can now be used to boost your credit score. 

Get a Secured Credit Card 

Get a secured credit card as soon as possible to start building up your post-bankruptcy creditworthiness. 

A secured credit card entails you putting down a small deposit, usually between $300 and $1,000, to open a cash-backed account. Your money will be held as collateral. You can then use your card as a credit card. Pay it off every month, on time, to start rebuilding your credit.  

Do your research and make sure that Secure Credit Card payment history is being reported to all three credit reporting agencies. 

Cutting Your Spending 

Having to file bankruptcy means that at some point in your life, you spent more money than you really had. In order to prevent that from happening again, you need to make sure that you're regularly making more money than you're spending. 

Any additional cash you earn can be used to improve your financial situation. It can be used on improving credit, paying off debts that weren't wiped out during bankruptcy, or building savings. 

Start by cutting back on auxiliary spending. Move into a smaller house or apartment if you can. Try to save 10% to 20% of your income every month. There is a whole other blog post on that coming soon. 

Make a Small Installment Purchase 

An installment purchase is treated differently on your credit report than revolving credit (e.g. credit cards). They're treated with more weight. 

An installment purchase includes car loans, home mortgages or even furniture purchases that are paid off in installment form. 

Make sure that any installment purchase you make is reported to all three credit reporting agencies. Getting installment loans and paying them off on time can do a lot for rebuilding your credit. 

Don't misunderstand me here, one loan at a time pay it off and then do another. You are rebuilding your credit worthiness not digging another grave.

If you apply these techniques, your after-bankruptcy credit can improve to the point where you can open new unsecured accounts within 2 or 3 years.

GOOD LUCK! 

Top 10 Ways to Get Your Student Loans Forgiven

With the climbing cost of education, student loan debt is becoming a bigger burden with each graduating class. Luckily, however, there are a few ways to reduce, or even eliminate, your student loan debt. 

Consider these career strategies to shrink your student loan debt: 

1.     Join the military. Serve Uncle Sam and you can eliminate up to 100% of your student loans. The amount of forgiveness depends on the type of student loan and where you’re stationed. If you’re considering joining the military, speak to a recruiter and ask for more information.

2.     Become a nurse. Due to the demand for more nurses, nurses are eligible to receive 100% forgiveness for Federal Perkins Loans. Nurses also enjoy high salaries, especially considering that it only requires two years to learn become a registered nurse.

3.     Work with the disabled. Many organizations offer this student loan forgiveness program. If you provide early intervention services to the disabled, you may qualify for up to 100% forgiveness of your Federal Perkins Loans. 

4.     Become a faculty member at a Tribal university. The government has labeled a few colleges and universities as tribal schools. These primarily serve Native Americans or Alaskan Natives. If you teach at one of these schools, you can have up to 100% of your Perkins Loan forgiven.

5.     Join the Peace Corp as a volunteer. You can have a great experience in a new country, help others, and reduce your student loan debt at the same time. You can earn up to 70% forgiveness of your Federal Perkins Loans.

6.     Join AmeriCorps VISTA. This is similar to the Peace Corp, but serves challenged areas of the U.S. Again, loan forgiveness can be up to 70%. Perhaps not exotic as the Peace Corp, but you can potentially stay close to home.

7.     Become a teacher. There are many places in the U.S. in desperate need of teachers. Most of these areas serve lower-income neighborhoods. Teach for five years and you can eliminate up to $17,500 worth of Federal Stafford loans. However, Plus Loans are not eligible.

8.     Become an educator. This program is much broader than the program aimed solely at teachers, and will forgive up to 100% of Federal Perkins Loans. You can be a speech pathologist, school librarian, staff member at a pre-kindergarten program, or even a teacher. Other professions can also qualify.  

·       Depending on the position, you may have to work for a certain number of years or have an advanced degree.

9.     Become a firefighter. If you’ve considered becoming a firefighter, there’s good news. You can receive up to 100% forgiveness of your Federal Perkins Loans after serving a few years.

10. Become a police officer or corrections officer. The firefighter plan also applies to police officers and corrections officers.

Many career options offer partial or complete student loan forgiveness. There’s a common theme to these programs: you must be providing an important service to those in need. You can gain valuable experience and enjoy the knowledge that you’re helping to improve the lives of others while you get rid of your student loans.

You can also use the DYI Credit Repair Program Template Letters in MyCreditSystem to have most if not all your student loan debt wiped out.