With many people in the United States burdened from the stress of debt, it’s hard not to fantasize about waking up one morning and having it all magically disappear. This may lead you to wonder whether or not the government can pay off your debt, especially if you’re in a tough spot.
Unfortunately, there is no government program that minimizes or forgives debt, but there are other options out there such as consumer credit counseling services to help you with debt relief. Keep reading on to find out more.
What Are Consumer Credit Counseling Services (CCCS)?
Consumer Credit Counseling Services Agencies are nonprofit organizations that provide credit counseling to those in need. They exist to help people find workable solutions to their difficult financial problems. There are also different types of CCCS agencies depending on the need required. These include agencies dedicated to budgeting assistance, financial education and debt management plans.
Are All Consumer Credit Counseling Services Nonprofit?
While a large amount of CCCS agencies are under the membership of the National Foundation for Credit Counseling (NFCC), there are other CCCS agencies that operate independently. If a CCCS agency breaks away from NFCC and operates by itself, they are considered to be an IRS 501(c)(3) nonprofit organization. These organizations still follow the guidance laid out by the NFCC. Click here to find out more.
National Foundation for Credit Counseling
The National Foundation for Credit Counseling (NFCC) is one of the largest nonprofit financial counseling organizations operating in the United States. They were founded in 1951 and are the longest-serving counseling organization across the nation. Each of the agencies they service has official NFCC certified financial counselors who are dedicated to helping people with difficult financial situations. Their ultimate goal is to review your finances with you and create a budget and plan to eventually get you debt-free.
The NFCC was created in response to the wide introduction of credit cards and the industry that came along with it. If consumers with credit cards don’t have the proper education, they can quickly find themselves in difficult situations. The NFCC works hard to educate people so they are as knowledgeable as possible when making financial decisions.
How Can a Nonprofit Credit Counseling Agency Help Me?
If you’ve found yourself riddled with debt and not sure where to turn, a nonprofit credit counseling agency could be a huge help to your situation. A large majority of these agencies offer their services for a reduced fee or even free of charge. This is an ideal starting point for someone who is strapped for cash and in desperate need of a financial plan.
Depending on the agency, you usually deal with a credit coach or other licensed professional to review your current situation. While it can be intimidating to go through your finances with someone new, they are only there to help. This is one of the first steps you need to take in order to achieve financial freedom. It also pays to have an expert on your side. Debt can be isolating and scary, so it’s great to look for manageable solutions with a trusted professional. These agencies exist to help those in need and are not looking to scam innocent people out of hard-earned cash.
Debt Management Plans
When working with an NFCC member agency, they will see if you’re eligible for a debt management plan that provides you with payment terms you can afford and in some cases an extended timeline to help you find your feet.
Debt management plans are a solution offered by nonprofit credit counseling agencies as a way to get you on track to financial stability. Your dedicated financial counselor will also help determine if a debt management plan is appropriate for you and your situation. If the timing and situation aren’t right, they will offer alternative solutions to help you.
How Does a Debt Management Plan Work?
If you decide to pursue a debt management plan with an NFCC agency, your financial counselor will help set up an agreement between you and your creditors. Your various payments will then be combined into a single payment each month payable to the nonprofit agency you are working with. They will then pass the funds directly to your creditors. If you decide to pursue a debt management plan, you may even have reduced finance charges and fees. Even better, the collection calls may start to decrease too!
This is a great way to get your credit back into a good place if yours was in need of assistance. Participating in a debt management program and not missing your monthly payment is ultimately a great tool to build up even the worst of credit scores.
Will My Credit Be Affected?
As discussed previously, participating in a debt management program is a great tool to improve your credit score. When you engage in a debt management plan, there won’t be any negative effect on your credit score.
There will, however, be a note in your credit report that says that you’re currently enrolled in a debt management plan. This isn’t anything to worry about and may actually positively affect your overall situation. When you show that you’re being proactive about your debt and work hard to make payments on time, this will only benefit your situation and credit score.
What’s the Difference Between Debt Management and Debt Settlement?
A debt management plan is a plan facilitated by a 501(c)3 nonprofit consumer credit counseling or NFCC agency to help you with your financial situation. Debt settlement is a different process. Debt settlement is another option that involves paying a for-profit company or organization to negotiate a settlement with your creditors to ultimately lower the amount of debt you owe.
If a settlement is reached, you will have to pay the debt settlement company a fee for using their services. It is important to do your own homework before engaging with either a debt management plan facilitated by an NFCC nonprofit agency or a debt settlement plan facilitated by a for-profit company.
Start Your Journey to Financial Freedom Today
While the government can’t pay off your debt, there are agencies out there that genuinely exist to help you reach financial freedom. Consumer credit counseling services can help you make single payments you can afford and ultimately help build your credit score over time.
The best part?
A large number of NFCC agencies provide their services for a reduced or nonexistent fee to help you get back on your feet. It pays to have professional advice, so why not reach out to a trusted agency today?
