Debt and 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
Help organization. Many Debt & Bill 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 Debt &
Bill Counseling organizations charge high fees, which may be
hidden, or urge consumers to make “voluntary” contributions
that can cause more debts.
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
Counseling programs. Your financial institution, local
consumer protection agency, and friends and family also may be
good sources of information and referrals.
Reputable Debt & Bill Counseling
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 debt
management, and money plan. 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 Relief Plan: If your financial
problems stem from too much debts or your inability to repay
your debt, a Credit Counseling agency may recommend that you
enroll in a Debt Consolidation Program (DMP). A DMP alone is
not Debt & Bill Counseling, and DMPs are not for everyone. You
should sign up for one of these plans only after a certified
Debt Help 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 and Credit Counseling organization still can help you
create a budget and teach you money management skills.
In a DMP, you deposit money each month
with the Credit Counseling organization, which uses your
deposits to pay your unsecured money owing., like your credit
card bills, student loans, and medical bills, according to a
payment schedule the counselor develops with you and your
debtors. Your debtors 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 & Bill Counseling
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 Debt Couseling 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.
Make sure your protected
Be wary of Debt Help organizations that:
charge high up-front or monthly fees for
enrolling in Debt Couseling or a Debt Consolidation Program.
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 Help Plan
without spending time reviewing your financial situation.
offer to enroll you in a Debt Management
Plans without teaching you money plan and money management
skills.
demand that you make payments into a
Debt Management Plans before your creditors have accepted you
into the program
