You’ve maxed out your credit cards. You’re paying your minimums, but your debt just seems to keep growing. No matter how many ways you try to manage your money, nothing seems to be working. If you find yourself in this financial dilemma, consumer credit counseling may be your ticket to financial freedom.
Unsecured debts are like two edges of the financial sword. On one hand, the creditors cannot seize your property to balance your debt because the debt isn’t based on tangible assets. On the other hand, these debts can wreak havoc on your credit. Unsecured debts include debts like credit cards, student loans, medical bills, utility bills, and consolidation loans that are paid according to creditor’s terms.
If you are unable to make your payments according to the terms, these creditors will report your delinquencies to the credit bureaus. Each bad report will lower your credit score. As more and more companies base their decisions on these reports, your chances of securing anything from a new car, a house, renting an apartment, and even getting satellite television can be impaired, require large deposits, or be just plain impossible to get.
If you make your payments sporadically to your creditors or cannot meet the payments at all, the creditors may even seek a judgment to obtain payment. Judgments are court orders that allow creditors to garnish your wages, usually 25 percent from each check you receive. When you are already pinching pennies, this additional loss of income can be devastating to not only your budget, but also your life.
Managing Your Debt
Most people have minimal education about managing their money and their debts. There are plenty of resources to help you learn, but unless you have the time to sift through all the different methods and scout out the method that will work best for you, education yourself may seem like an insurmountable task.
You may even have that education and feel well equipped to handle your budgeting, but if you don’t have an income to match your debts, all the budgeting knowledge in the world may not be enough. And your debts are still there regardless of your education or your income.
How Consumer Credit Counseling Can Help
Consumer credit counseling can give you the backup you need. Usually, these credit counselors have the expertise that the average citizen doesn’t. They’ve studied the financial world and know how it ticks.
Using their services mean you don’t have to tackle your debt dilemmas alone. They have established relationships with major creditors and have studied financial law. Their services assist you in reducing your monthly payments by making new contracts with your creditors. Most will combine all your debts into one monthly payment and then divide that payment among your creditors according to these new agreements.
Many credit-counseling services also include educational articles or classes to help you gain some footing on managing your own debts in the future. Rather than finding yourself in an impossible situation, facing bad marks on your credit reports or possible court judgments, consumer credit counseling can help you regain control of your finances.
They are what they say they are — Consumer Credit Counseling — meaning they counsel consumers about their crediting and money management. And they are more than that — they give you the ability to learn how to manage your debts yourself and handle your current debt situation for you enabling you to start seeing black instead of red in your financial life.
Organised by the Institute for Information Law (IViR), University of Amsterdam (NL)
Chair: Katja de Vries, VUB-LSTS (BE)
Moderator: Frederik Zuiderveen Borgesius, IViR, University of Amsterdam (NL)
Panel: Ralf Bendrath, European Parliament (EU), Federico Ferretti, Brunel University London (UK), Estelle Masse, AccessNow (BE), Peter van den Bosch, Dutch Credit Rating Agency (NL)
Lenders use profiling to estimate a consumer’s creditworthiness. Lenders have legitimate reasons to adapt interest rates to certain consumers, or refuse to lend to them. Increasing amounts of information (‘big data’) become available for profiling. One UK online lender uses up to 8000 data points to assess, automatically, a consumer’s creditworthiness. However, automatically deciding whether a consumer is granted credit or not brings problems. For instance, profiling-based decisions are often incorrect for a particular consumer. A second problem is the opaqueness of profiling: consumers may not know why they are denied services or why they have to pay a higher interest rate. Third, profiling can discriminate unintentionally, for instance when an algorithm learns from data reflecting biased human decisions.
– What are the main risks of profiling and automated decisions in the context of consumer credit?
– Are the profiling rules in the General Data Protection Regulation sufficient to protect people?
– Should the law do more to protect people against discrimination or unfair treatment, and if so: what?
– Are specific rules needed for profiling in the context of consumer credit?
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