Credit Card Debt and Consumer Counseling.
Credit counselors can be very successful with helping consumers reduce their debts and improve their overall financial condition. According to the National Foundation for Credit Counseling, which tracks and represents over 1,500 counselors in the U.S., 60% of clients complete the plans successfully and they get the help they need with paying debt and bills.
Consumer Credit Counseling: If you are not disciplined, do not know how to tackle your debt on your own, or if you need help creating a workable budget and sticking to it, you should strongly consider contacting a credit counseling organization. Other reasons to contact a consumer or credit counseling organization include maybe you can’t keep track of your mounting bills and financial obligations, or if you are unable to work out a repayment plan on your own with your creditors and need help dealing with them. Many credit counseling organizations are non-profit organizations, offer free or low priced advice, and they will work closely with you to help solve your financial problems. They will offer solid advice for helping you get back on track with your finances, and help you pay off your credit card debt and any other bills that you may owe money on.
Most credit counselors offer their services using the Internet, the telephone, or local offices. Sometimes it is good to find an organization that offers in-person counseling for that personal touch. More on National Foundation for Credit Counseling.
Credit counseling organizations can advise you on managing your debts and money, help you develop a way for paying bills, develop a budget, create a debt consolidation plan, and will offer free educational workshops and materials. The counselors are trained and certified in the areas of credit repair, budgeting, money and debt management.
When entering into a plan, counselors need to discuss your entire financial situation with you. They will work with clients and help you develop a personalized plan that suit your needs to help solve your money problems. The main objective of any organization is to help you get your bills and credit card debt paid off in the shortest amount of time possible. Credit counseling can also help you avoid bankruptcy. Your first session typically lasts an hour, with an offer of one or more follow-up sessions
Questions to ask a credit counseling agency
When you are ready to contact them you can e-mail, or call the consumer credit counseling agencies. You should ask them a few questions such as below. You should get the answers in writing as well, so contacting them over the internet and e-mail is usually your best option.
- What services do you provide and how will they help me with paying my bills and debt?
- Do you provide free advice or educational materials? If so, how can I obtain them?
- Can you help consolidate debt?
- Are there any fees for your services? If so, what are they? Do I need to pay anything up front? Are there any monthly fees I need to pay? How are those fees they calculated?
- What training do your credit counselors have? Are they accredited or certified?
- Who regulates or oversees your agency? Is your company or agency audited annually?
- Learn more about credit counseling agencies.
Those are just a few examples of what to ask. Find a more extensive and detailed list of what questions to ask a credit counselor.
Locate credit counseling agencies
There are hundred of agencies and non-profit organizations located across the nation. Some of them operate in certain regions of the country, some are national, and some are local. Many agencies are also non-profit. No matter which agency you contact, always be sure to closely review any fees that may be involved in this process. Click here to find a list of credit counseling agencies.
Debt Management Plans offered
If your financial problems are caused by too much debt or you lack the ability to repay your loans, a consumer or credit counseling agency will probably recommend that you enroll in a debt management plan (DMP). A DMP alone is not the same as credit counseling, and DMPs are not for everyone. You should only sign up for one of these plans after a certified credit counselor has spent significant time reviewing your overall financial situation, and after the counselor has offered you customized advice on managing your money. Even if a DMP is appropriate for your need and situation, a reputable credit counseling organization still can help you create a budget, give advice on paying bills, and they can also teach you money management skills.
In a DMP, you will need to deposit money each month with the credit counseling organization, which will then use your deposits towards paying your unsecured debts, like your credit card bills, medical bills, and student loans. All of your obligations will be paid off according to a repayment schedule that the counselor develops with you and your various creditors.
Throughout this process, your creditors oftentimes will agree to waive certain fees or lower your interest rates, but you need to be sure you check with all your creditors to be sure they offer this help. Look into all possible concessions, and the credit counseling organization should describe them to you. A successful DMP will also require that you make regular, timely payments towards your bills, and could take 48 months or more of paying to complete the plan.
Be sure to ask the credit counselor to estimate how long it will take for you to complete the debt management plan. Sometimes, you may need to agree not to apply for, or even use, any additional credit cards while you are participating in the plan.
Questions to ask about a debt management plan
- Will you give me ongoing budgeting help and advice, regardless of whether or not I enroll in a DMP? Is a DMP the only option you can give me?
- How does your DMP work? How will you ensure that all my creditors and debts will be paid in the correct billing cycle and by the applicable due dates?
- How are the amount of my payments determined?
- How often can I get updates and reports on my accounts? Can I get access to my credit card and outstanding bills online or by phone?
- Can you get my creditors to eliminate or lower finance and interest charges, or waive late fees?
- Is there any debt or bills that you will not help with paying, and aren’t included in the DMP? If so, what can you do to help with that credit card debt, or bills?
- Do I have to make any payments to my creditors before they will accept the proposed payment plan?
- How/will signing up in a DMP affect my credit scores over the short and long term?