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The downside of credit counseling no one talks about

| Apr 9, 2018 | Blog |

Imagine you’re swimming in debt and realizing that you’ll never be able to fully pay them off. You might see an advertisement for a credit counseling service that can help you get back on track.

The promises of credit counseling services are numerous enough to get you excited give the service a try. But there are some downsides of which you must be aware before signing on for such a service. In many situations, bankruptcy offers a faster, cheaper and better debt solution.

The cons of credit counseling

Here are a few things that the average debt consolidation company will never tell you before enrolling in their programs. Make sure you fully understand these and all the other ‘cons’ involved in debt counseling, debt consolidation, debt management programs:

  • Credit counseling often doesn’t work. Approximately 47 percent of people who use credit counseling drop out of the program without ever resolving their debt. This means that you have a 50/50 chance of failure if you enroll in one of these programs.
  • Lenders will view you as a risky borrower. Lenders will see that you’re in a credit counseling program on your credit report. The majority of lenders will refuse to loan money to debtors who are enrolled in such a program until the program has finished. This could be four or six years after beginning the program.
  • Employers could view you negatively as well. Since it shows up on your credit report, potential employers could also view you as a risky bet, which could negatively affect your employability.
  • Some debt might not be included in the program. There will be some types of debt that you can’t consolidate in your program. You will need to continue paying off this unincluded debt on your own.

Examine all of your debt resolution options

There are many different options available to debtors who want to resolve unpaid debt. If you haven’t considered bankruptcy, you might want to investigate this option now. Although bankruptcy is not the solution for all debt-related woes, when someone can qualify for this financial lifesaver, the results can be positive.

Facing Overwhelming Debt?