Monthly Archives: December 2017

Facts About Credit Counseling

If you find yourself struggling to pay off all your debts and managing your personal finances, don’t feel so miserable and think that you are alone. The truth is a lot of people are facing the same financial problems as you. Those who have given up trying to manage their own finances on their own are opting to receive some credit counseling. Generally speaking, credit counseling is just like any kind of professional counseling, which is offered by several financial organizations with the aim to assist borrowers in properly repaying all the debts they have accumulated.

Credit counseling plays a huge role in the development of a borrower’s ability and discipline to manage his or her finances, which then leads to their success in overcoming their debt burden. What this type of counseling does is allow the borrowers to pay their debts with monthly payments in the most convenient manner possible, in terms of the amount and the term of repayment. Thus, credit counseling is required for people who are having a hard time figuring out all their debts with all the different lenders.

There are a lot of companies offering credit counseling services these days. This is such a helpful and essential type of service, so it is made accessible to everyone. You are very likely to locate a couple of companies with this service in your own area. The easiest way that you can find one is to do a search over the internet. The cost of such type of service varies according to the company offering it.

If you are wondering how credit counseling actually works, it is actually very simple. A counselor will first make an assessment of a borrower’s financial and credit situation. And based on this assessment, the counselor makes a plan of how the borrower will be able to pay off all his debts. More often than not, these counselors encourage borrowers to settle for longer terms of repayment, so that it will be easier for the borrowers to manage their finances every month.

It is also common for borrowers to decide not to pay their creditors or bills directly. Instead, they have their credit counseling services arrange for all their bills and debt repayments. What this means is less worry on the part of the borrower, and an assurance that all borrower’s debts and bills will be paid on a regular basis.

There are a number of credit companies offering credit counseling services. In fact, there are so many of them that a borrower needs to be careful in choosing the most reputable ones. There are also a lot of unprofessional agencies that try to offer this counseling service, which may be very risky on the part of borrowers. It is therefore crucial that the background of the company be checked and verified. Credit settlement and financial matters are very sensitive and important matters, so you would always want only the experts and the professionals to handle your finances and debt management issues.

Things to Expect From a Credit Counseling

So, you have finally decided to enroll in a counseling program offered by a reputable credit counseling agency in your locality. You decided to do this so that you can resolve your credit problems once-and-for-all.

Still, you want to know what you can expect from your very first counseling session. To help you in this matter, allow us to run you through three major steps usually undertaken by finance experts and their clients in debt relief guide programs.

Three Steps in Debt Relief Programs

1. Getting and Verification of Contact Information – Before your financial situation will be analyzed, you will be requested by the finance specialist to provide personal and contact information. The certified counselor of the credit counseling agency will ask you to write down your complete name, address and phone number, office contact details, and other relevant information. Aside from these, you may also be asked to provide additional documents such as citizenship papers, company ID’s, and passport that can vouch for your identity. This step is vital since it allows the debt relief guide provider to verify your identity.

2. Reviewing of Your Monthly Finances – After gathering your personal information and verifying your identity, the next step that your credit counseling agency will do is to ask you to provide it a clear picture of your financial standing. To do this, you may need to give the finance specialist an accurate report of your monthly earnings and expenses. You may be asked by the credit counselor to list down all your monthly expenses so that he can help you distinguish the necessary from the unimportant items. Aside from this, you will also be required to itemize your existing credit obligations as well as the interest rates charged on these accounts. This way, the finance specialist can come up with solutions tailor to fit your financial capabilities as well as your personal situation.

3. Provision of Solutions and Alternatives – The third and last step of the debt relief guide program is the provision of personalized solutions and alternatives. In this step, the finance specialist of the credit repair help provider will give you different strategies that you can employ to end your credit woes and repair your credit history. For example, he or she may recommend that you get social service assistance, mortgage deals, self-study materials and debt management programs. The certified counselor will tackle the benefits and drawbacks of each option so that you can select one that will help you, not only to retire your credit obligations but also to regain your credit reputation.

But the credit counseling program does not end there. You can actually contact the credit repair help provider anytime you need further information that you can use to pay down your outstanding debts. You can also call the finance specialist to provide you a better program that you can employ in case of sudden changes in your life, like a job loss or a debilitating illness.

Counseling Certificates Could Be Given Despite Lack of Understanding

HECM counseling is a requirement that applicants must fulfill before they can take out a reverse mortgage. The purpose of this counseling session, which can be completed either face to face or over the phone, is to ensure that potential revere mortgage borrowers fully understand the requirements of the loan and the potential outcomes that the loan can have. During the session, the counselor discusses the applicant’s budget, current mortgage balance, terms of the loan, disbursement options and alternatives to a reverse mortgage in case a better type of financing would better fit that individual’s needs. At the end of the session, the counselor provides a certificate to the applicant that shows that he or she completed the session. The certificate is supposed to also show that the applicant fully understands reverse mortgages and what they require, but now that may not always be the case.

Reverse Mortgage Comprehension May Not Be Necessary to Secure a Certificate

As part of the new HECM counseling protocols that will soon be announced by the Department of Housing and Urban Development, financial counselors will no longer be able to withhold financial counseling certificates from applicants, even if they believe that the applicant does not understand what a reverse mortgage is or what it requires. At first, the new protocol was going to require that applicants answer questions, provided by HUD, at the end of the counseling session to ensure that they understood the concept of a reverse mortgage. If applicants did not get at least five questions right, they would not be able to receive the counseling certificate. The counselor could then suggest further counseling, and then they could receive their certificate if they answered at least five questions correctly the next time around. But this idea was pushed aside in favor of providing the certificate to the applicant, regardless of how much information the applicant retained.

With this proposed protocol, applicants could lack a necessary understanding of reverse mortgages and still receive their counseling certificate, which would allow them to continue on with the process of getting a loan. If HECM counselors feel that the applicant does not fully understand a reverse mortgage at the end of a counseling session, they can suggest additional counseling, but that does not necessarily mean applicants will oblige. If this new protocol is passed, the responsibility of ensuring that applicants fully understand how a reverse works will soon fall on the lender, rather than the responsibility resting with the financial counselor.

Will the Importance of HECM Counseling Be Undermined by Protocol?

Lately, in the reverse mortgage industry there has been much emphasis placed on the necessity of financial counseling and the importance of ensuring that eligible homeowners are aware of the requirements of the loan. Counseling helps applicants determine if the loan is most suitable for their financing needs, and it can also help prevent them from becoming victims of mortgage fraud by arming them with valuable reverse mortgage information. Some individuals in the industry feel that ensuring that applicants are well informed about the product they are getting should still mostly be the responsibility of the financial counselor. After all, isn’t that the point of financial counseling in the first place? While, some do agree that lenders should share part of the responsibility, they should not now be required to also fill the intended role of the HECM counselor. Should applicants be allowed to continue with the process of getting a reverse mortgage even if they do not understand the basic concepts of the loan? At what point has the counselor or loan officer violated the homeowner’s right to make his or her own decisions? It could be a recipe for disaster.

Homeowners interested in getting this product to finance their homes should make sure that they fully take advantage of their counseling session. At the end of the session, there should not be any confusion or lingering questions on the part of the applicant. Applicants should want to be well informed so that they can have the best experience possible. Interested applicants can find a list of HUD-approved financial counselors on HUD’s website. Information about the type of financing an applicant chooses is key to ensuring a positive, successful reverse mortgage loan experience all around.

Is Bankruptcy The Answer To Your Debt And Personal Finance

As unpleasant as most people find the idea, there are situations involving debt and personal finance that simply cannot be remedied through cost cutting and extra jobs. Perhaps your or your spouse has experienced a lengthy period of unemployment, or there have been huge medical bills to deal with. The mortgage company is threatening to foreclose on your home, the bank wants to repossess your car, and the phone rings non-stop from people calling to collect past due payments on your credit cards. No matter how hard you have tried, you have made little progress in solving your personal finance problems. In such scenarios, bankruptcy may be your best choice.

Before you decide, however, you might want to consult with a credit counseling service. These agencies can work with your creditors and usually get them to reduce or waive interest, cycle accounts to get them current, and get your payments reduced. Staff at these agencies is well versed in all areas of personal finance, and they can often find a solution to your debt problems that does not involve bankruptcy.

A credit counseling service will want you to make a serious commitment to getting your personal finances back on track and reducing your debt. You cannot just engage their services and then continue to make new charges. But they are often an excellent choice if your finances are out of control and you are drowning in debt.

Different agencies have different methods, but most have certain similarities. They will negotiate with all of your creditors and arrive at a total payment you will need to make to the agency each month. They will then disburse the funds according to the arrangements they made with your creditors. Some agencies charge a fee for handling your personal finances, but some local organizations provide similar services for free. Many agencies, especially the ones sponsored by non-profit organizations, will require you to attend a class or do coursework on personal finance and credit to help you prevent the problem from recurring.

If these agencies cannot help you with your personal finances, it may be time to consult with a bankruptcy attorney. He or she should offer a free initial consultation. You will need to bring complete records of who and how much you owe and how far behind you are. Do not try to conceal any debts or hide any income. Providing false information in a bankruptcy, such as concealing assets, is a criminal offense. The attorney will review your personal finance information and advise you on how to best proceed.

Normally, you will be able to keep your home and cars, provided you continue to make the payments on them, as well as your personal property. Certain dollar limitations do exist, but your attorney can advise you on them. They are quite liberal, and few consumers will approach these limits.