Debt Negotiation: If you’re not disciplined
enough to create a workable financial budget and stick to it,
can’t work out a repayment plan with your debtors, or can’t
keep track of mounting bills, consider contacting a Debt Help
organization. Many Debt & Bill Counseling organizations are
nonprofit and work with you to solve your financial problems.
But be aware that, just because an organization says it’s
“nonprofit,” there’s no guarantee that its services are free,
affordable, or even legitimate. In fact, some Debt & Bill
Counseling organizations charge high fees, which may be
hidden, or urge consumers to make “voluntary” contributions
that can cause more debt.
Most credit counselors offer services
through local offices, the Internet, or on the telephone. If
possible, find an organization that offers in-person Credit
Counseling. Many universities, military bases, credit unions,
housing authorities, and branches of the U.S. Cooperative
Extension Service operate nonprofit Debt and Credit Counseling
programs. Your financial institution, local consumer
protection agency, and friends and family also may be good
sources of information and referrals.
Reputable Debt Counseling organizations
can advise you on managing your money and bills, help you
develop a budget, and offer free educational materials and
workshops. Their counselors are certified and trained in the
areas of consumer credit, money and debt management, and
financial budget. Counselors discuss your entire financial
situation with you, and help you develop a personalized plan
to solve your money problems. An initial counseling session
typically lasts an hour, with an offer of follow-up sessions.
Debt Consolidation Program: If your
financial problems stem from too much bills or your inability
to repay your debt, a Debt & Bill Counseling agency may
recommend that you enroll in a Debt Consolidation Plan (DMP).
A DMP alone is not Debt Couseling, and DMPs are not for
everyone. You should sign up for one of these plans only after
a certified Debt Couseling has spent time thoroughly reviewing
your financial situation, and has offered you customized
advice on managing your money. Even if a DMP is appropriate
for you, a reputable Debt Help organization still can help you
create a money plan and teach you money management skills.
In a DMP, you deposit money each month
with the Debt Help organization, which uses your deposits to
pay your unsecured debt., like your credit card bills, student
loans, and medical bills, according to a payment schedule the
counselor develops with you and your creditors. Your debtors
may agree to lower your interest rates or waive certain fees,
but check with all your creditors to be sure they offer the
concessions that a Debt Negotiation organization describes to
you. A successful DMP requires you to make regular, timely
payments, and could take 48 months or more to complete. Ask
the Debt Negotiation to estimate how long it will take for you
to complete the plan. You may have to agree not to apply for —
or use — any additional credit while you’re participating in
the plan.
Protect Yourself
Be wary of Debt Help organizations that:
charge high up-front or monthly fees for
enrolling in Debt Negotiation or a Debt Help Program.
pressure you to make “voluntary
contributions,” another name for fees.
won’t send you free information about
the services they provide without requiring you to provide
personal financial information, such as credit card account
numbers, and balances.
try to enroll you in a Debt Relief Plan
without spending time reviewing your financial situation.
offer to enroll you in a Debt Counseling
Plan without teaching you financial budget and money
management skills.
demand that you make payments into a
Debt Consolidation Plan before your creditors have accepted
you into the program
