Pros and Cons of Consumer Credit Counseling Agencies
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Pros and Cons of Consumer Credit Counseling Agencies
The pros
Avoiding bankruptcy is the biggest advantage of working with a consumer credit counseling agency. Bankruptcy is a federal court action that allows those who have more debt than income to escape collection or repay only a portion of what is owed.
Things To Know
- Consumer credit counseling agencies work to help you avoid bankruptcy, which should be a last resort.
- Consumer credit counseling agencies do not guarantee protection.
Bankruptcy should be considered only as a last resort. Having your debts forgiven may sound nice, but bankruptcy can stain your credit history for years to come, making it even more difficult to buy a house, a car, or reestablish good credit. It can even impact your career and personal relationships.
The cons
But there is a downside to working with consumer credit counseling agencies, too.
First, these agencies do not guarantee protection. If you miss a monthly payment to the agency, you are on your own. All it takes is just one creditor to begin collection actions, and your debt management plan comes to an abrupt end.
Second, if you agree to a consumer credit counseling agency’s debt-management plan, you agree to pay all debts in full.