How to Choose a Credit Counseling Program?
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, budgeting, money and debt management. They discuss your entire financial situation with you, and help you develop a personalized plan to deal with your money problems. An initial counseling session typically lasts 90 minutes.
A reputable credit counseling agency should provide free information about itself and the services it provides without requiring you to provide any details about your situation. If a firm doesn’t do that, consider it a red flag and go elsewhere for help.
Once you’ve got a list of counseling agencies you might do business with, check each one out with your state Attorney General or local consumer protection agency. They can tell you if consumers have filed complaints about any one of them.
What is a Debt Management Program?
A Debt Management Plan sets up a payment schedule for you to repay your debts within 60 months. If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP).
A DMP alone is not credit counseling, and DMPs are not for everyone. Don’t sign up for one of these plans unless and until a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is not appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
What are the advantages and how does a Debt Management Program work?
Many of the national creditors reduce interest rates; waive late and/or over limit fees to help you get out of debt. Some actually re-age the account to bring it current after several consecutive monthly payments. Once your Debt Management Plan is established you should see the collection calls stop.
What is the cost of a Debt Management Program?
There is no fee for financial counseling sessions. If you qualify and choose to enroll in a Debt Management Program there is a one-time set up fee to cover the expense of account activation, and a monthly servicing cost to cover recurring expenses incurred to administer your DMP. CCCS does not retain your first payment or charge closeout fees. Costs may be reduced or waived for clients under severe financial distress.
How will this affect my credit report?
Normally people do not contact CCCS until they are in financial trouble. If someone is struggling and already behind with payments their creditors have already reported negative information to the credit bureaus. CCCS does not report information about you to the credit bureaus and we cannot make changes to your report. Some creditors will reflect your participation in the program and some will bring your account to a current status. However, when you take back control with regular monthly payments you will rebuild and restore your credit history.
How often can I get a status report on my accounts?
Active Debt Management Program clients will receive an identification number and pin to access their account information at any time day or night on our secure website.
10 Signs You Have Too Much Debt (click for PDF)