Credit counseling is a valuable service for consumers who have trouble managing their finances. A distinctly different service from debt consolidation, credit counseling assists consumers with problem debt by educating them about the basics of money management. Americans really don't get the education they need about how to manage bank accounts, balance checkbooks, or pay bills on time, and credit counseling can provide these services as well as others. By educating consumers, counselors hope to reduce the number of debtors who are forced to file for bankruptcy. Anyone whose financial situation is such that they would benefit from credit counseling may wish to seek it out in a hurry, however. A number of different factors are coming together in such a way that the counseling industry may soon be completely swamped with more clients than it can handle.
Recently passed bankruptcy legislation, designed to reduce the number of consumer bankruptcy filings, will now make credit counseling mandatory as a prerequisite for a bankruptcy petition. Anyone who wishes to file for bankruptcy relief must first demonstrate that he or she has undergone credit counseling during the past six months. By requiring counseling as a condition of debt relief, Congress hopes to reduce or eliminate repeat filers. The counseling industry is preparing for the additional customers now, as the new law is set to take effect in October 2005.
Other factors will weigh heavily on the counseling industry, however. A 2003 law passed by Congress requires credit card companies to raise their minimum payments so that their customers can repay their balances more quickly. This has resulted in the near-doubling of minimum payments, and the average American household, which has a credit card balance of $10,000, will see their minimum monthly payment rise from $200 to $400. Since many households can only afford the minimum payment now, the hike in the minimum due may drive more Americans into counseling and bankruptcy.
The increased reliance upon interest-only mortgages and low-interest adjustable rate mortgages could be a factor, too, if home prices either fall or fail to increase as they have. The sky-high prices in many markets have led homebuyers to purchase more homes than they can really afford, often using mortgages that are themselves riskier than the traditional 30-year loan. Should interest rates rise or housing prices fall, tens of thousands of homeowners will find themselves with loans that either exceed the value of the home or are unaffordable.
Those in the credit counseling industry say that this is a critical time, and the combination of new laws, fragile markets, and credit card industry overhaul could push a number of consumers towards bankruptcy and mandatory counseling. Anyone with problem debt who might benefit from counseling should consider doing so sooner, rather than later, as qualified credit counselors may be quite busy this fall.
©Copyright 2005 by Retro Marketing.
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to personal bankruptcy, debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans.
When it comes to debt consolidation some people dream of... Read More
Consolidating credit card debt is never easy. Too often people... Read More
Student loan consolidation is one of the most used methods... Read More
A Consolidation Loan allows you to combine your federal student... Read More
Debt consolidation is often a last resort for people who... Read More
Are you looking to consolidate credit card or other debt?... Read More
With the popularity of plastic money in the present age,... Read More
There are many benefits in choosing a Debt Consolidation Loan,... Read More
Sometimes life can get on top of you and out... Read More
Credit that cannot be managed or is not being repaid... Read More
Jane was a fun loving girl from Birmingham, you could... Read More
Deciding to file for bankruptcy is a decision that should... Read More
For many people the lure of easy credit has taken... Read More
Does this Sound like You? There are 100 shopping Days... Read More
Many different types of financial aid are available to you... Read More
Your credit card bills are stacking up and for whatever... Read More
You're burdened with crushing debt and at the end of... Read More
The average American household has nearly $10,000 in credit card... Read More
Studies show that Americans are now saving less than ever... Read More
Debt Consolidation is a solution that solves your debts. Debt... Read More
If you are in debt, you have several options available... Read More
If your objective is to reduce interest rates and lower... Read More
Millions of consumers across the globe are searching for a... Read More
Debt management fees can vary vastly from one company to... Read More
With consumer debt on the rise, many people have found... Read More
Whether you're wanting to consolidate your debt to avoid bankruptcy,... Read More
Before letting too much debt or too many payments get... Read More
For millions of homeowners, refinancing is the perfect way to... Read More
If you are in the market for a low interest... Read More
Finding solutions to reducing your debt takes some thinking and... Read More
Are debt settlement companies scams? It's a simple question so... Read More
Private Student Loans ? dispelling the mythsIf savings, grants, scholarships,... Read More
Debt consolidation is a popular topic these days. The average... Read More
Millions of consumers across the globe are searching for a... Read More
If you are in the market for a low interest... Read More
The average American household has nearly $10,000 in credit card... Read More
You are trying hard to eliminate your loans but keep... Read More
Debt Consolidation of Different LoansDebt consolidation refers to the restructuring... Read More
Credit counseling is a useful service for anyone with problem... Read More
If you have multiple debts, and are struggling to meet... Read More
In our world of dizzying change, nothing is more true... Read More
A secured debt is a debt in which the creditor... Read More
When you are living paycheck to paycheck and it seems... Read More
Jane was a fun loving girl from Birmingham, you could... Read More
If you are overwhelmed by debt, there are options you... Read More
However far you are along the road of financial/debt problems,... Read More
A Debt consolidation loan: Is a personal loan you use... Read More
Planning For Debt Elimination Without Surplus CashPreviously we looked at... Read More
One of the easiest "things" that can happen in life... Read More
If your objective is to reduce interest rates and lower... Read More
The rising cost of living can force you sometimes to... Read More
Before letting too much debt or too many payments get... Read More
Debt consolidation is often a last resort for people who... Read More
Someone great once said that 'if it isn't the sheriff,... Read More
Americans are using credit cards more than at any time... Read More
If you believe in the good in people then you... Read More
Eliminating your debt is a daunting task. What can you... Read More
If you're like most people, you have plenty of credit... Read More
Deciding to file for bankruptcy is a decision that should... Read More
The recently passed Bankruptcy Abuse and Consumer Protection Act was... Read More
Debt consolidation loans can be the answer to a number... Read More
We are aware of the fact that it is easy... Read More
Debt consolidation programs are devised to get you out of... Read More
Debt consolidation companies have dotted the debt solution landscape as... Read More
If your debt is becoming difficult to get on top... Read More
Debt consolidation programs can help you lift the burden of... Read More
Debt Consolidation |