Financial Counseling Association of America (FCAA) member credit counseling agencies offer debt relief programs to assist consumers experiencing financial hardships related to COVID-19 pandemic.
COVID-19 financial hardships still loom large. Without relief through government aid, consumers are likely relying more and more on credit cards to help manage household expenses. Added to that is the concern that it may become more difficult for consumers to pay the bills when deferments offered by credit cards issuers end.
Now more than ever, consumers need to be aware of their options when it comes to seeking help repaying their unsecured credit card debts.
Let an FCAA member credit counseling agency be your first stop for unbiased, confidential advice regarding debt repayment. Education based by mission, credit counseling agencies provide impartial information based upon a consumer’s unique set of financial circumstances. There is no “one shoe fits all” remedy for consumers experiencing financial hardship.
After a thorough review of your budget, a certified credit counselor can discuss the various available options for debt repayment. Here are just some of what those options might be:
- Self help – With just a bit of discipline, you may be able to stay on track and repay your outstanding credit cards on your own.
- Debt Management Plan (DMP )- If you qualify, a certified credit counselor can enroll you in a DMP. Your outstanding credit card debt payments will be consolidated to one monthly payment to the credit counseling agency, which then disburses the monthly payments to your creditors. DMPs are designed to be no longer than five years in duration. In exchange for working with a credit counseling agency, the consumer receives lower interest rates and waived late fees from creditors. Because payments are being made monthly, accounts won’t fall into default, there will be no calls from collectors, there are no tax consequences (as could happen with debt settlement) and the hit to one’s credit score will likely be less severe than had one enrolled in a debt settlement plan.
- Debt Settlement – While a viable option for some, there are some pitfalls to debt settlement plans. Consumers are advised to stop making their monthly payments and save for the settlement offer, meaning accounts fall into default and the collections phone calls begin. Late fees and interest charges start to pile up. There is no guarantee any settlement offers made to creditors will be accepted. Any debt forgiven is subject to taxation. And finally, as no payments are being made and the consumer shows as being in default, the consumer’s credit score can take a pretty big hit during this process.
- Bankruptcy – If filing for protection under either Chapter 7 or Chapter 13, you would be best advised to speak with a bankruptcy attorney first.
- Debt Consolidation loans – This is merely an exchange of one form of debt for another, albeit hopefully at a lower interest rate.
So why not pick up the phone and call an FCAA member agency to discuss your options?
To get help from an FCAA agency, call 800-450-1794.