The hustle and bustle of modern everyday living takes its toll on lots of people. If you find yourself living from paycheck to paycheck and are now worried that debt collectors are going to come knocking at your door. Maybe it is time to have a good hard look at the mirror and examine your lifestyle, expenses and the idea of getting a credit counselor to sort yourself out from the money pit you’ve inadvertently dug for yourself.
Most if not all reputable credit counselors are non-profit entities that offer services at brick and mortar establishments or via the internet. It is recommended that you look for a credit counselor such as Consumer Credit of Minnesota that provides in-person counseling. However, it is important to note that the term “nonprofit” does not automatically mean services are completely free of charge. There are some consumer credit counseling organizations that provide premium services with premium fees. Some hide the cost while others might urge their clients to make “voluntary” donations to certain organizations. Here are some tips to guide you on how to select a worthy credit counselor.
Credit Counseling Organization
Begin by looking for a reputable credit counseling organization that can offer you advice on how to manage your money and your debts. They should be able to assist you to work out a budget, and provide free instructional workshops and educational materials. The counselors they employ should be certified and experienced in consumer credit including debt management. They should be able to discuss in detail your entire financial situation and assist you in coming up with a viable plan to help rein in your liquidity issues. Usually, an initial session lasts for an hour and with follow-up sessions as well.
A good credit counseling agency must also provide you with free information about their products and services without a requirement from your part to first give them information about your financial status. Any company that requires otherwise is most likely a scam. Therefore, you should seek help somewhere else.
Get a list of at least 3 credit counseling organizations that you are interested to do business with and then perform some due diligence on them by contacting your state attorney general and local consumer protection agency. They can provide you with information regarding any complaints that have been filed against them.
Try to look for an organization that provides a good range of services that include budget counseling and savings and debt management classes. Try to avoid organizations that instantly push for a debt management plan as your only choice even before they have given some time about your financial situation.
Offer of Information
Educational materials must be given for free. Those that charge for them you should avoid.
Fees of Credit Counselor
Ask for a specific quote in writing for their services.
Not Able to Pay
In case you are not able to afford the cost, the organization must offer some form of assistance to help you get on the right track. Those that refuse to help because of your inability to pay, avoid them.
Read the Fine Print
Never sign anything unless you have read and understood the terms and conditions of the deal. All verbal promises should be transcribed in writing.
Debt Management Strategy
If your financial woes stem from too much debt or your inability to repay them, a credit counseling agency may probably recommend what is called a debt management plan or DMP. A debt management plan alone does not constitute credit counseling and this approach is not for everyone. Never sign up for this plan unless and until a reputable credit counselor has gone over and reviewed thoroughly your situation and has provided you advice on how to manage your money. Even if a debt management plan is right for you, the credit counseling people can still provide assistance on establishing a budget and teach you some money management moves.
Debt Management Plan
A debt management plan works by depositing money each month with the credit counseling organization. They then use the cash to pay your unsecured debts such as credit card bills, medical bills, student loans and the like. The payment scheme is in accordance with a payment schedule the counselor comes up with you and your creditors. Your creditors might agree to lowering interest rates or even waive certain fees as a result. It is always a wise move to first check with your creditors first if they are amenable to such an arrangement. Keep in mind that in order for a DMP to be successful, you should be able to make regular and timely payments which might take as much as 48 months or more depending on your debt and capability to pay.