Consumer credit counseling services are designed to assist consumers who are overwhelmed with unsecured debt and need assistance with renegotiating the debt to get lower interest rates and monthly payments. CCCS attempts to make debt manageable while keeping consumers out of bankruptcy, if possible. These services have received bad reputations in the past when some unscrupulous organizations posed as caring groups but did little more than harm the consumers. In present day, however, tighter regulations make it easier to find a viable CCCS organization when help is needed.
Both not-for-profit and for-profit consumer credit counseling services exist. In the vast majority of instances, consumers will find more success with a not-for-profit CCCS because there will be far fewer fees and the creditors will be more willing to allow for lower interest rates and waived fees. This is not always the case, of course, but looking for a consumer credit counseling agency that will not drain you financially with endless fees is important. It is a good idea to look for a CCCS that has an excellent rating with the Better Business Bureau.
It is a common misconception that a consumer credit counseling service will allow users to renegotiate their debt and then go along with business as usual, racking up debt and using credit cards. Enrolling in a consumer credit counseling service usually involves signing a contract that specifies that the person will not seek out new debt without receiving permission from the CCCS servicing the account. Another misconception is that CCCS does not affect credit scores; in most instances, CCCS temporarily lowers a person's credit score.
The length of time a person remains enrolled in a consumer credit counseling service depends largely on the amount of debt a person has to pay off using the service. Some people remain enrolled in CCCS for several months while others may stay in CCCS for a few years. Since the renegotiation of debt often slashes the minimum monthly payment to far less than it once was, paying off the debt in full can take a long time.
Consumer credit counseling services allow people to avoid bankruptcy and to pay off their debt without the constant harassment of creditors demanding payment. Once a debtor agrees to accept the terms of a CCCS agreement they contact the CCCS representative instead of the consumer, meaning that a person who has a large amount of delinquent debt may find great relief from phone calls of collectors by enrolling in CCCS. The very best benefit of enrolling in CCCS is the fact that following the payment schedule will eventually result in zero unsecured debt, which is a huge achievement.
Experts within the realm of personal finance have differing opinions when it comes to consumer credit counseling services. Some experts feel that these services are a fantastic alternative to declaring bankruptcy, but other experts claim that CCCS is a waste of time and money because debt renegotiation can be done by individuals who are willing to contact creditors on their own. The bottom line is that CCCS can be a good idea if it is indeed the best way for an individual to wittle down debt and get finances back on track.
Tamsen Butler is a freelance writer and editor. She has been a professional writer for nearly five years and writes regularly for several financial and parenting websites. She is a published author and is enrolled in graduate school pursuing a degree in counseling. Her two children keep her quite busy but also enjoys teaching acting classes and is active in her church.