The Pros and Cons of Credit Counseling

Some might debate whether we’re still in a recession, but even before the recession there were still millions of Americans that were in serious trouble with their credit card debt. With the recession, the unemployment rate and the housing crisis there are still a lot of consumer worried about the economic downturn. More now, than ever, the number of Americans that are suffering from extreme credit card debt is growing and a large number of that population is seeking professional help for their credit card problems.

There is currently $800 billion in credit card debt in the US, with the average household holding around $14k in credit card debt and the number growing with each year, the popularity of credit counseling has been rising simultaneously.

Credit card debt is a problem for a lot of folks and can get unmanageable when you find yourself missing payments, and the total balances start climbing past your annual income. For those of us that are really stressing out about our credit card debt, and befuddled about what to do with ourselves credit counseling might be a viable alternative to bankruptcy.

Before you join any program you should really weight out the pros and cons, that rule should be important when you’re dealing with anything financial.

Credit Counseling Pros:

· Education: In the 1950s credit counseling was first established as a way to spread “financial literacy” throughout the US. Credit counseling is still a very valuable educational resource for personal finance, and somebody who is deep in credit card debt is probably a personal finance misfit who has never had anybody speak to them in regards to things like debt, setting up a budget and credit cards. Good credit counseling revolves and focuses on educating the consumer and providing them with the tools, resources and information on how to avoid bankruptcy.

· Interest rates: If you choose to enter a debt management plan (DMP) than you will benefit from your credit counselor negotiating with your creditors lower interest rates for your credit cards.

· Harassment: Are you tired of harassing creditors calling you while you’re at home or trying to spend time with your family? Well if your credit counselor has done his job than those phone calls should most likely stop.

· Save Money: A good credit counselors is skilled at the art of negotiation and will negotiate lower interest rates for you, get credit card fees, and over the limit fees waived.

· Credit rating: In the long run getting rid of your debt, and paying off your credit cards in a timely fashion is going to eventually help your credit rating but even more important give you peace of mind.

Credit Counseling Cons:

· Monthly fees: Most credit counseling organizations are non profit, but that doesn’t mean a debt management plan isn’t going to cost you. Most DMPs will cost a consumer around $50 tops.

· Home buying: If you’re in credit counseling it will show up on your credit report and banks may have a hard time lending to a borrower that has supposed credit card problems. This is something to consider if you’re in the market for a home, but sometimes a credit counselor can take you off the program if you’re in the market for a home, temporarily, until you have closed on your homes.

· DMP: Some credit counseling organizations will take you off the debt management plan if you miss one payment, so you have to be cognizant and on top of your payments.

Credit counseling has helped many individuals out of debt, but that’s not to say that it comes without problems, getting out of debt takes discipline, hard work and sacrifice. You have to be committed to your personal finance growth if you want to become financially independent from debt.

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Credit Counseling Lies Exposed – The Shocking Whole Truth Credit Counselors Don’t Want You to Know

You’re deeply in debt, wondering which way to turn. You’re confused, worried, and so stressed out you can’t think straight. What do you do?

Many people mistakenly turn to credit counselors. Often people struggling with serious debt make the dangerous assumption credit counselors are “the good guys” because they advertise being “not-for-profit”. Other times debtors lured by the debt management companies believe a common “half-truth” (out-right lie) promoted by the credit reporting agencies and credit counselors alike about how such debt consolidation programs affect your credit. Do you know how your credit may be affected?

Before we look at the truth behind these deceptive claims, let’s clear up the terminology and eliminate any confusion.

You see, “Consumer Credit Counseling Services” goes by many names… but ALL of these different names are really the same thing. These many names include credit counseling, CCCS, debt consolidation, debt consolidation plan, debt consolidation program, debt management plan, DMP, debt management program, and of course the infamous “Non-Profit” Credit Counseling Program.

The Truth About How Credit Counseling Affects Your Credit

While enrollment in Consumer Credit Counseling Services no longer affects your numerical credit “score”*, being enrolled in “CCCS” has a VERY DAMAGING impact on your credit “worthiness.” Credit worthiness is your ability to get a loan.

(* This is assuming that the credit counseling agency actually makes your payments on time – which is often NOT the case, as many, many people who have mistakenly enrolled in such debt management plans report.)

Why does enrollment have such a damaging affect on your credit worthiness?

· Statistics show it’s most likely that you will never complete your debt management plan and will most likely file bankruptcy instead.

· Some statistics report 7 out of 10 people who enroll into debt management plans fail to get out of debt.

Just ask ANY mortgage lender in the country…

When pulling your credit report, EVERY ACCOUNT included in your “debt management plan” is listed just as a bankruptcy would be, with a notice under each account saying something similar to:


This means big trouble for you. Lenders call this a “walking bankruptcy” because it’s a *major red flag* indicating you cannot manage your money and had to hire a third party to do it for you. Plus, you still owe the debt and are at a much greater risk of filing bankruptcy in the near future.

How will these negative credit entries affect you?

You will pay much more in fees and interest rates, if you are able to obtain credit at all, during the 4-7 years you are enrolled in your debt management program.

Who’s Hiding This Hurtful Half-Truth (Outright Lie) From You?

Credit counselors, your creditors & the credit reporting agencies are all in cahoots together. They all promote the half-truth that CCCS does not affect your credit score. The vast majority, including the credit reporting agency websites fail to mention the rest of the story.

While it is true that credit counseling has no affect on your credit score, that’s only half of the truth.


Because credit counseling has a major negative impact on your credit worthiness.

The Truth Regarding So-Called “Non-Profit” Credit Counselors

Don’t be fooled by the words “non-profit.” Claiming a debt management plan is “not-for-profit” is ridiculous, but it’s fooled many people into making poor money choices.

· The IRS has revoked the non-profit status of over 50% of the credit counseling industry in the past two years.

· The IRS is conducting an investigation of the entire industry!

Here’s the PROOF “they” don’t want you to see:

· Debt management programs were created by the credit card industry back in the 1950′s

· The credit industry lobbied congress to achieve their touted “non-profit” status for the debt management programs.

· They are really a collection arm for the credit card industry.

· Next to minimum payments on high interest credit card debt, Credit Counseling is how creditors make most of their profit!

· Their CEO’s are paid VERY WELL from the kick backs they receive (called “fair share”, usually 15% of all payments received by you) — from YOUR creditors!

· Plus, aren’t you paying a $35-85 monthly FEE?

How’s that a non-profit?

On top of these costs to you, many credit counselors ask their customers, who come to them deeply in debt, for a “donation” to their “non-profit” organization. Often, these agencies pressure their customers into making “regular donations.”

Is this acting in your best interest?

A Secret Credit Counselors Were Able To Hide For A Long Time

The goal of these programs is to:

· Fool consumers into paying back 100% of their balances PLUS interest when they’re in deep financial hardship, instead of filing bankruptcy or seeking debt settlement when such options may be much more appropriate.

A lot of profit has been made from these “non-profit” debt consolidation programs over the years. The banking and credit institutions, credit reporting agencies and those politically sensitive to these corporate lobbying giants all promote such debt management plans because that’s how they stay in business.

In 2004, PBS FRONTLINE and The New York Times produced “The Secret History of the Credit Card” and went on to win 2004-05 Grammy for Outstanding Investigative Journalism. (Google “The Secret History of the Credit Card” to watch this program for free online – great information you’ll wish you had known sooner if you’re dealing with credit card debt.)

Now the truth is out, but your creditors are still hoping you don’t find out…

Is There A Better Alternative Than Credit Counseling?

Now don’t get me wrong, debt management programs can be a great thing for certain people. Could credit counseling be the best option for you?

Sometimes, if a person cannot qualify for a better program to eliminate debt faster, at a lower cost and a lower payment with less credit damage, credit counseling may be best.

It may not be. I’ve helped many people get out of debt through credit counseling over the years, but only after they were educated on the all of their options, and the whole truth about each. I personally consider it unethical to promote a single solution instead of looking at an individual’s specific circumstances and situation to discover the exact solution best for them.

Share these facts with the people you know before someone else becomes another sad statistic!

Learn the difference between “credit rating” and “credit worthiness”, and learn how credit works so you can have it work for you.

Are you 100% certain Consumer Credit Counseling Services is the best option for you to get out of debt? If you want to get out of debt ASAP, then you should know other options are available.

Hi, I’m Jesse Niesen of, the Debt Relief Guide Online and the Debt Free ASAP Blogwhere you get Info, Answers, Tips & GUARANTEED Email Responses to Your Questions.

I’d like to give you Free Instant Access to my Debt Relief Guide Online, so you can make “your best choice” to be Debt Free ASAP.

This Debt Relief Guide makes it easy for you to finally get this area of your life handled. Inside you’ll get a customized Debt Analysis, Budgeting Guide and the Financial Education Program “How To Be Debt Free ASAP” (Videos, Audios, Workbook, Expert Q&A and more) to SAVE YOU BUNCHES of MONEY.

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Credit Counseling FAQs

Epic Debt Relief is a debt settlement company, not a credit counseling agency. As such, the following information is strictly for educational purposes and not representative of any of the services that are offered at Epic Debt Relief. This information should serve to demonstrate which types of debt services are best for the customer’s needs, and nothing else.

What is Credit Counseling?

Credit counseling is a service that is very different from debt settlement. Customers will make payments to the counseling agency on a monthly basis. Their payments are then distributed to the creditors based on the plan set up between the consumer and the credit counseling agency. These plans generally last up to 5 years, and the interest rates will be lower than what consumers are used to paying for their credit cards. The savings can be larger because of the reduced interest rates, and counseling is also offered to help with budgeting, spending, and debt.

What is involved in the process?

When a consumer goes to credit counseling, they will work together to determine a monthly payment based on the amount of debt that the consumer has and the creditors that are owed. Consumers sign up with the credit counseling agency and then send the monthly payments to the agency. The agency then negotiates lower interest rates when and where they can, and make the payments to the creditors. However, it is entirely possible that some creditors will not give lower rates or participate in the programs.

What’s the cost of credit counseling?

Every state, company, and individual situation will affect the cost of credit counseling services. Some states have specific regulations about fees and charges, and if you have a lot of debt or creditors you will likely pay more than most people. Set up fees average around $50 while monthly fees for being a member are around $30-$40. These fees are often low simply because your creditors will give part of your payments back to the counseling agency. If a company tries to take your money right away, you might want to avoid them because they’re probably not the best choice in companies to work with.

What about non-profit companies?

There are some credit counseling services that are not-for-profit, but not all of them. There are many companies that operated in the past as non-profit that have lost their tax exempt status because they were found to be partially profitable. However, most non-profit companies will still charge you fees for their services unless you are in a financial situation where payment is not an option.

Does this mean that non-profit services are regulated by the government?

No, they just have tax issues to consider for their non-profit operations. Many of the non-profits that exist are neutral and will attempt to be impartial when assessing your needs. Some companies, for profit or not, will still have a vested interest in signing up consumers regardless of their situation simply for the fees that they will earn.

What about Epic Debt Relief? How does it compare to counseling?

Epic Debt Relief offers services to people who legitimately have issues with paying off their debts and who cannot afford to make payments on their own. Credit counseling is designed more for those people who have budgeting and spending problems and can afford their bills, but just have put themselves into a bad situation. If your main issue comes in avoiding calls and negotiating interest rates, credit counseling is the better choice because it will have a smaller impact on credit scores. Debt negotiation, however, is a little more serious but is designed for those people who are serious about their debt settlement options and have nowhere left to turn.

What is the downside to credit counseling, and does it affect my credit?

Yes and no. If your bills are up to date, you’ll have a negative effect on your credit for using the services, but if you are behind, using counseling to catch up payments looks good in most cases. Keep in mind that debt settlement and payment plans don’t actually impact your credit score, but they will affect your report when lenders see reported on there that you worked with credit counseling and/or debt settlement. Credit counseling also doesn’t lower monthly payments enough for some people, which is what they need in the first place. Since you’re not settling debt, you have to rely on the counseling company to make your payments on time each month, and if they don’t your interest rate might go right back up. The final downside to credit counseling is that not all creditors participate. This is something that you don’t find out until the agency tries to make payments to them, and then the account will be considered past due because they didn’t get the payments from the counseling service because they don’t participate.

Finding the right alternative to bankruptcy is critical to your success in taking care of your debt once and for all.

Epic Debt Relief was founded by Bankers and Lawyers who understand how the current economic crisis has affected millions of Americans including ourselves. We have leveraged our existing business relationships to insure that you, the consumer, will achieve the greatest savings possible for each and every debt enrolled. Our mission is clear! We are here to help settle your existing unsecured debt and put you back on track towards financial freedom. Our core services offer an alternative to bankruptcy, credit counseling, and debt consolidation. []

Epic demands excellence and professionalism from our Debt Consultants. Our debt settlement program is custom tailored around your unique financial situation. When choosing a debt settlement company, you must be sure that your individual situation is understood by your consultant. Our negotiators are licensed and certified by the International Association of Professional Debt Arbitrators and Accredited Members of The Association of Settlement Companies, TASC, so you can be comfortable knowing you are in the best hands possible.

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