Debt & Bill 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 Debt and 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 Debt Negotiation 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
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 money
owing, 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 Consolidation Program: If your
financial problems stem from too much money owing or your
inability to repay your bills, a Debt and Credit Counseling
agency may recommend that you enroll in a Debt Consolidation
Plan (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 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 Couseling 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 Couseling organization, which uses your deposits
to pay your unsecured bills., 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 Couseling 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.
Cover Yourself
Be wary of Debt and Credit Counseling
organizations that:
charge high up-front or monthly fees for
enrolling in Debt Couseling or a Debt Help 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 Relief Plan
without spending time reviewing your financial situation.
offer to enroll you in a Debt Help
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
