Debt & Bill Counseling: If you’re not
disciplined enough to create a workable budget 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
Credit Counseling organization. Many Debt Help 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
Counseling organizations charge high fees, which may be
hidden, or urge consumers to make “voluntary” contributions
that can cause more debt.
Most credit counselors offer services
through local offices, the Internet, or on the telephone. If
possible, find an organization that offers in-person Debt &
Bill Counseling. Many universities, military bases, credit
unions, housing authorities, and branches of the U.S.
Cooperative Extension Service operate nonprofit Credit
Counseling programs. Your financial institution, local
consumer protection agency, and friends and family also may be
good sources of information and referrals.
Reputable Credit Counseling
organizations can advise you on managing your money and bills,
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 Program: If your financial
problems stem from too much money owing or your inability to
repay your bills, a Debt Counseling agency may recommend that
you enroll in a Debt Relief Program (DMP). A DMP alone is not
Debt and Credit Counseling, and DMPs are not for everyone. You
should sign up for one of these plans only after a certified
Credit 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 & Bill Counseling organization still can help
you create a financial budget and teach you money management
skills.
In a DMP, you deposit money each month
with the Debt and Credit Counseling organization, which uses
your deposits to pay your unsecured debt., like your credit
card bills, student loans, and medical debts, 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 Credit 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 & Bill 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.
Make sure your protected
Be wary of Debt Couseling organizations
that:
charge high up-front or monthly fees for
enrolling in Debt and Credit Counseling or a Debt
Consolidation 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 Counseling
Plan without teaching you financial budget and money
management skills.
demand that you make payments into a
Debt Consolidation Plan before your creditors have accepted
you into the program
