Debt Consolidation Depot
Debt Consolidation & Financial Information Resource Center
June 9, 2004
With AmeriDebt's bankruptcy filing, it becomes more important than ever that credit-strapped consumers be able to find a credit counseling service that is truly working to help them get out of debt.
(PRWEB) -- Most of what credit counselors do you can do for yourself,
according to former credit counselor Paula Langguth Ryan. But, if you’re too
emotionally involved with your money situation to create and stick with a
plan and negotiate with your creditors then using a credit counselor may be
a good option for you.
Ryan, the author of the forthcoming Break the Debt Cycle For Good, which is
based on her popular workshop of the same name, says not all credit
counselors are in the business to help you. Nothing is a stronger reminder
of this, says Ryan, than the recent bankruptcy of AmeriDebt, a nationwide
credit counseling service that had fraud charges filed against it earlier
this year.
Credit or budget counselors, including those who are listed as being with
the Consumer Credit Counseling Service (CCCS) or the Genus/National Credit
Counseling Service (NCCS) are non-profit organizations that offer free
budget counseling and (for a small fee which is often rolled into your
monthly payments), debt repayment plans.
With a credit or budget counselor, you set up a workable budget and send one
lump sum payment to the credit counseling service so they can divide the
money up among your creditors. "Your budget may seem tight at first, but you
will find that you could be completely debt free within 3 years if you stick
to the repayment plan," says Ryan.
Most credit and budget counselors work with your creditors to get them to
accept smaller payments from you, and attempt to freeze or lower interest
rates and late payment or over-the-limit fees. In addition, once you’ve
entered into a repayment plan with the counselor, the harassing phone calls
from creditors will stop. Even if you choose to set up your own repayment
plan, instead of going through the credit counselor, you can get free budget
assistance from them.
If you do decide to us the credit counselor’s debt repayment program, Ryan
urges you to ask these questions, which she includes in Break the Debt Cycle
-- For Good!, before you sign up to make sure the program is legitimate and
is designed to help you get out of debt:
1. Which of my creditors have worked with you in the past to reduce
payments, or freeze or lower interest and fees? Before you sign up for a
repayment plan, make sure that the counseling service can help you reduce
interest and fees for your creditors. Not all creditors are willing to
negotiate with credit counselors. If most or all of your creditors are
willing to negotiate, then it may be in your best interest to start a
repayment plan. If most of your creditors won’t work with the credit
counselor, then a repayment plan won’t work for you. To be on the safe side,
ask the credit counselor for a list of the creditors that have worked with
them or have them put in writing which of your creditors they have
successfully negotiated with in the past.
2. When will my creditors be paid? Some counseling services have a set date
each month when they take money out and apply it to your debts. Sometimes,
creditors wind up being paid after their due dates. Make sure that the
counseling service will work with your creditors to change the due dates or
will set up your payment schedule based on when you get paid. The best
services will work around your payday and your bills’ due dates.
3. Can you take money electronically out of my checking account or will I
have to send you a certified check or money order each month? You’re much
more likely to stick with a repayment plan if making that single payment to
the counseling service is a “no-brainer.” If you’re pressed for time and
don’t think you can get to your bank each month to get a certified check,
make sure the counseling service will take money out of your account
electronically.
4. How often can I see statements of my accounts? Your counselor should send
you at least monthly reports on your progress. The statements should show
you how much of your payment is going toward interest, how much toward the
minimum payment and how much toward the counselor for his/her services.
5. Will I always deal with the same counselor, or at least get a live person
on the phone when I call during regular business hours? How long does it
take for you to return phone calls? Make sure you’re comfortable with the
answers you get here, and that you’re comfortable with the people you might
be dealing with. After your free budget counseling session, call your
counselor once or twice with questions you have about the budget paperwork
to make sure that you don’t have a problem getting your questions answered
and your phone calls returned.
There’s no obligation or payment due to any good credit counselor until
after you’ve determined what your monthly payment would be under the plan
and you’ve decided to join their program. Ryan encourages people to explore
all options and then pick the credit counseling service that makes you feel
most comfortable.
© 2004 DebtConslidationDepot.com