Consumer credit counseling may be an alternative to bankruptcy. Credit counseling is a process in which a credit counselor creates a payment schedule, and requires you to make monthly deposits with the credit counseling service. These funds are then transferred to your creditors. One of the advantages of New York credit counseling is that creditors may grant you a reduced interest rate and a lower monthly payment. However, you may not use, or apply for, any credit for the duration of the program.
In order for a repayment plan to be effective, you have to ensure that your payments are made regularly and on time. It could take longer than four years to settle all of your debt, however the New York credit counseling service will be able to provide a more accurate estimation of how long it will take to complete the plan. The costs of credit counseling services vary from some charging nothing or a very little amount, to others whose fees can add up to significant amount. There are also credit counseling services who obtain all or some of their funding from creditor contributions. It is also important to keep in mind that although may reduce your interest rates and make your monthly payments more affordable, it will not completely eliminate debt like filing bankruptcy.
New York credit counseling does not reduce you debt; it may only reduce the interest rates and financing fees. New York credit counseling will also not erase negative credit reporting based on past financial behavior. Furthermore, the inability to keep up with your payment plan will cause additional damage to your credit score. New York credit counseling plans could potentially last a very long time depending on the amount of debt you have.
Although New York credit counseling provides a very viable alternative to bankruptcy, it is important to give this debt management strategy considerable thought before making a final decision.
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A debt repayment plan does not mean that your credit history will be erased. The Fair Credit Reporting Act allows for precise details about your accounts to remain on your credit report for a maximum of seven years, while a bankruptcy will appear on your record for up to ten years. Furthermore, any information about accounts that are being settled through a payment plan will still be reported by creditors.