Everyone needs help with their budget at some point or another, and counselors have designed consumer credit counseling organizations to help people with a wide variety of needs. Maybe you’ve recently had to pay a lot of money for a medical emergency, and you need some help getting your finances back on track. Maybe you haven’t slept well in years because creditors keep calling you, and you’ve reached the end of your rope. Maybe you’ve always struggled with barely making your minimum monthly payments and want to find a less stressful method of dealing with your bills.
Because people have such a large assortment of financial worries, you need to make sure you get the right services for your needs when you look for consumer credit counseling. Some small agencies will try to push everyone who walks through their doors into a debt management plan, while in reality researchers have found that, on average, only about one-third of clients need a DMP. As you look for a good organization, check out the company’s history, how many types of services it offers and its qualifications, such as membership in the National Foundation for Credit Counseling. Reputable counseling organizations will have services ranging from budget counseling to community education programs and homebuyers’ workshops, in addition to DMPs. Also, before you visit a credit counseling organization, check with your creditors to make sure that they will work with the specific credit counseling organization you’re considering.
The first time you go to a consumer credit counseling service, the counselor will help you evaluate your current finances. You need to bring along a complete list of your debts and creditors, as well as bank account information. The evaluation is confidential, and sometimes free, or else they charge a small fee after you complete the session. Most trustworthy credit counseling organizations will not make you pay an up-front fee. If you feel more comfortable talking with someone over the phone, many services offer that option, as well as the option of getting an evaluation online for convenience and anonymity.
At the end of the first session, the credit counselor will give you advice and suggest the next step you should take. Usually, the next major step consists of either working out a plan so that you can handle your finances on your own, or signing up for a DMP. If you do decide to enroll in a DMP, then make sure you ask the cost of the program, and don’t pay up-front here, either. Some credit counseling organizations may charge monthly fees, but make sure you don’t pay more than 10% of your total debt, at the most.
Credit counseling won’t solve your problems overnight, but if you follow some good advice by professionals who have helped many people overcome their money worries, you should see a steady improvement in your finances. If creditors were calling you before, they should stop once they start receiving regular payments from you, usually after about three months. When you notify your creditors that you have enrolled in a credit counseling program, they may even stop late fees and interest charges because you now present a lower risk to them. Many times, creditors provide much of the funding for consumer credit counseling organizations, so you should feel secure that you can improve your finances with a reliable credit program.
By Lisa Zyga