Debt Counseling: If you’re not disciplined
enough to create a workable financial budget and stick to it,
can’t work out a repayment plan with your debtors, or can’t
keep track of mounting bills, consider contacting a Debt Help
organization. Many Debt 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 Help
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
Help. 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 & 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 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 bills or your inability to repay
your money owing, a Debt Negotiation agency may recommend that
you enroll in a Debt Help Plan (DMP). A DMP alone is not Debt
Couseling, 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 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 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 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 Debt and 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.
Make sure your protected
Be wary of Debt Help organizations that:
charge high up-front or monthly fees for
enrolling in Debt and Credit Counseling or a Debt Relief
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
Consolidation Program without spending time reviewing your
financial situation.
offer to enroll you in a Debt Help
Program without teaching you money plan and money management
skills.
demand that you make payments into a
Debt Counseling Plan before your creditors have accepted you
into the program
