Credit Counseling: If you’re not
disciplined enough to create a workable money plan and stick
to it, can’t work out a repayment plan with your creditors, or
can’t keep track of mounting bills, consider contacting a Debt
Counseling organization. Many Credit Counseling organizations
are nonprofit and work with you to solve your financial
problems. But be aware that, just because an organization says
it’s “nonprofit,” there’s no guarantee that its services are
free, affordable, or even legitimate. In fact, some Credit
Counseling organizations charge high fees, which may be
hidden, or urge consumers to make “voluntary” contributions
that can cause more bills.
Most credit counselors offer services
through local offices, the Internet, or on the telephone. If
possible, find an organization that offers in-person Debt and
Credit Counseling. Many universities, military bases, credit
unions, housing authorities, and branches of the U.S.
Cooperative Extension Service operate nonprofit Debt & Bill
Counseling programs. Your financial institution, local
consumer protection agency, and friends and family also may be
good sources of information and referrals.
Reputable Debt Negotiation organizations
can advise you on managing your money and debt, help you
develop a budget, and offer free educational materials and
workshops. Their counselors are certified and trained in the
areas of consumer credit, money and money owing management,
and budget. Counselors discuss your entire financial situation
with you, and help you develop a personalized plan to solve
your money problems. An initial counseling session typically
lasts an hour, with an offer of follow-up sessions.
Debt Help Program: If your financial
problems stem from too much debts or your inability to repay
your debts, a Debt Help agency may recommend that you enroll
in a Debt Help Plan (DMP). A DMP alone is not Debt Help, and
DMPs are not for everyone. You should sign up for one of these
plans only after a certified Debt & Bill Counseling has spent
time thoroughly reviewing your financial situation, and has
offered you customized advice on managing your money. Even if
a DMP is appropriate for you, a reputable Debt Help
organization still can help you create a budget and teach you
money management skills.
In a DMP, you deposit money each month
with the Debt Help organization, which uses your deposits to
pay your unsecured debt., like your credit card bills, student
loans, and medical bills, according to a payment schedule the
counselor develops with you and your debtors. Your creditors
may agree to lower your interest rates or waive certain fees,
but check with all your creditors to be sure they offer the
concessions that a Debt Negotiation organization describes to
you. A successful DMP requires you to make regular, timely
payments, and could take 48 months or more to complete. Ask
the Credit Counseling to estimate how long it will take for
you to complete the plan. You may have to agree not to apply
for — or use — any additional credit while you’re
participating in the plan.
Protect Yourself
Be wary of Debt Help organizations that:
charge high up-front or monthly fees for
enrolling in Debt Couseling or a Debt Counseling Plan.
pressure you to make “voluntary
contributions,” another name for fees.
won’t send you free information about
the services they provide without requiring you to provide
personal financial information, such as credit card account
numbers, and balances.
try to enroll you in a Debt Counseling
Plan without spending time reviewing your financial situation.
offer to enroll you in a Debt Relief
Program without teaching you financial budget and money
management skills.
demand that you make payments into a
Debt Relief Plan before your creditors have accepted you into
the program
