If you’ve been battling debt for years and have finally paid it off, you must feel as if a giant weight had been lifted from your shoulders. If you’re tempted to dance around the room shouting, “free at last, free at last,” I certainly wouldn’t fault you. Being seriously in debt can have a very negative impact on your life and getting completely out of debt can feel like there’s a new day dawning.
$120,000 in debt
I recently read the story of a couple that had managed to get $120,000 in debt. They hadn’t done anything extravagant either. There were no trips to Paris, no luxury automobiles, and no McMansion. The way they put it was that they had gotten into debt the boring way – one credit card charge at a time. There was a happy ending to the story as they paid off every cent they owed though it took them five years. The not so happy part is in they both had to work second jobs in order to pay off their debts – and they were in their late 50s. Can you imagine how happy they were and how free they felt when they paid off that last credit card?
High marks for their ethics
You have to give this couple very high marks for their ethics. They could have filed for bankruptcy and discharged probably all of that $120,000 in debts in just three to six months. Instead, they decided to do the right thing, which was to pay off everything they owed even if it did require a lot of sacrifice and extra work on their part. Spoiler alert – they did this with the help of consumer credit counseling.
Consumer credit counseling
Consumer credit counseling can be a good way to get your debts under control and to eventually pay them off as did the couple in this story.
If you’re not familiar with credit counseling it’s where you go to a consumer credit counseling agency – either in person or online. You are assigned a credit counselor who will help you develop a budget and create a debt management plan for paying off your debts. When all your creditors sign off on your debt management plan, you will longer be required to pay them. The credit counseling agency will pay them for you while you then send it a check every month until you complete your plan.
The pros and cons of credit counseling
If the idea of using credit counseling to pay off your debt appeals to you, it’s important that you know both the pros and cons.
The pros are that you get your creditors off your back, you get a monthly payment that should be less than the sum of the payments you’ve been making and you’ll have more time to pay back what you owe. In fact, the typical credit counseling payment plan takes five years. And the credit counseling agency is usually able to negotiate down your interest rates so that you actually pay back less money.
However, there are also cons. You will have to surrender all your credit cards and not take on any new revolving debt during the five years it will take you to complete your plan. If you fail to make any of your payments, your plan might be revoked and you could end up in a real mess of trouble. And the accounts included in your debt management plan will usually be written up on your credit report as “not being paid as agreed,” which could have a negative effect on both your credit and credit score.
You, too, could be free at last
If you want to do right by your creditors, credit counseling could be a good answer. It’s not a quick or easy way to get out of debt but if you’re willing to put in the work and spend the time, it could eventually have you, too, shouting “free at last.”