Rough waters may require professional debt help
Your financial situation has seemed like smooth sailing. Then all of a sudden it hits you like a big wave: You’re being rocked with high credit card interest because you can’t pay off the balance in full. It looks like you never will. You’re diligently making payments on an automobile loan, but it’s getting harder and harder to do every month. Unexpected expenses such as medical bills, repairs to your house, and increased college tuition are making matters worse.
You’re wondering if you could lose your home to foreclosure. Finally, you come to the conclusion that you need professional help with your finances. Now what?
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Debt management planners are readily available online
Internet ads for credit counseling organizations are abound. Many of them tout a firm’s incomparable skill in arranging a debt management plan (DMP). A DMP requires you to regularly deposit money with the credit counselors, who then pay your bills for you on a schedule and at an interest rate acceptable to both you and your creditors. The benefit, if the plan works, is that you get out of debt more efficiently than you could on your own and repair your credit.
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DMPs are not for everyone
DMPs are not a panacea. Before you sign up, talk to a certified credit counselor who offers a full range of services. Get a thorough review of your financial situation. Collect as much advice as you can on money management. Then, if you’re still thinking about going with a DMP, contact your creditors. Make sure they will accept a proposed plan before you send any money to the debt management firm.
Take care in choosing
As you explore your options, it’s wise to avoid companies who
- Promise from the start that they can get you out of debt with low payments. How would they know?
- Charge for information on their services. This should be free.
- Evade questions about their license and the qualifications of their counselors. Many states require debt management firms to obtain a license and counselors to be trained and certified by an outside organization.
Urge you to purchase services or products without knowing much about you. Some firms receive a commission for selling things that may not be in your best interest. - Offer little or no education. You should be invited to take part in a comprehensive information session where the counselor offers a variety of solutions to your problems.
- Won’t tell you how long your repayment plan will last. You’ll want to know exactly when you can expect to be debt free.
- Charge unreasonable fees. A reputable agency won’t charge a large upfront fee. The fee to set up a debt management plan should be about $75; the fee to maintain a plan, about $50 a month.
- Urge you to commit over the phone. Get everything – everything -- in writing.
- Have accumulated consumer complaints. Check with your state attorney general’s office, a local consumer protection agency and the Better Business Bureau to see if other consumers are happy or unhappy with what the firm did for them.
- Can’t explain how they will protect your privacy. The firm you choose will handle your most sensitive information.
Do your homework
More than a few firms claiming to be experts in the debt management business are, to put it bluntly, crooks. Selecting a reputable one goes far beyond web surfing. You have to do your homework to keep your head above water.
Debt management companies
Alliance Credit Counseling
Charlotte, NC
(704) 943-0332
American Consumer Credit Counseling
Newton, MA
(617) 559-5700
ClearPoint Financial Solutions
Richmond, VA
(804) 222-4660
Consumer Credit Counseling Service of St. Louis
St. Louis MO
(888) 656-2227
Consolidated Credit Counseling Services
Ft. Lauderdale, FL
(954) 484-3328
Family Credit Counseling Service
Rockford, IL
(815) 484-1600
Family Financial Education Foundation
Evanston, WY
(307) 789-2010
Family Life Services
Tucson, AZ
(520) 869-0210
Garden State Consumer Credit Counseling
Freehold, NJ
(732) 409-6281
Foundation for Debt Management
Clearwater, FL
(800) 344-5153
Garden State Consumer Credit Counseling
Freehold, NJ
(732) 409-6281
Greenpath, Inc.
Farmington Hills, MI
(248) 553-5400
iPayDebt Financial Services
Austin, TX
(512) 263-0532
Money Management International
Houston, TX
(713) 394-3400
Springboard Nonprofit Consumer Credit Management
Riverside, CA
(951) 781-0114
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