New York Credit Counseling

In light of the overall state of the economy and of the personal financial situation of many Americans, credit counseling is becoming a necessary alternative for many consumers in New York and the rest of the country. A solid alternative to bankruptcy, credit counseling at the hands of a trained professional is designed to provide financial education and debt strategies based on individual requirements. Included in the process are debt level assessment, payment plan scheduling based on personal income, and the potential negotiation with creditors.

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Procedure
During the initial stages of credit counseling, the certified credit counselor will analyze the number of accounts, account balances, minimum payments, balances due, and the state of past due accounts. The counselor will then evaluate this information based on monthly income, state (such as New York), and total overall assets. Upon completion of the evaluation process, the credit counselor will create a debt management plan, which is designed to outline a schedule of debt repayment for the client and the client's creditors. The plan is then sent to each individual creditor for their approval.

Once the client's creditors have agreed to the guidelines outlined in the debt management plan, the client will begin making payments to the credit counseling agency. The credit counseling agency acts as a neutral party in the debt dispute, distributing payments to the individual creditors according to the guidelines outlined in the debt management plan. In most cases, as long as the client adheres to the terms of the management plan, accounts are effectively frozen.

Associated Costs
Many credit counseling agencies claim to operate on a non-profit basis. However, a non-profit status does not mean that the services that they provide are completely free of charge. In most instances, the individual agency will charge a fee based on the services that they provide in order to cover their operating expenses. While the overall nature of this fee is not static from agency to agency, most credit counseling services will either deduct the fee from the initial management plan payment or withhold a small amount from each payment during the course of the plan.

Fees also vary by state law. For example, credit counseling in New York has no fee cap, but many other states prohibit fees greater than $50 per month.

Is it Necessary
While it is true that a credit counselor does not have any specific privileges beyond those of a private citizen, many consumers find the services extremely useful. Many consumers find dealing with individual creditors to be time consuming, difficult, and intimidating. Additionally, their experience with the credit industry allows credit counselors to negotiate more favorable terms than many private consumers are able to on their own.

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