Debt Management and Credit Counseling

Question: Do debt management programs really work? How do I know if I’m being scammed? - Eric

Answer from Lee Davenport, Senior Money Producer, The Beehive

 

Financial service non-profit organizations work with your creditors to reduce your interest charges, reduce payments and bring accounts current by combining your debts into one payment that they can send to the different creditors.

 

Debt consolidation for the average person means trimming payments to creditors from 7 years to 5 years and reducing your payments from $650 to as low as $525.

 

But remember, there is no quick solution to this situation. If someone promises you something that sounds impossible, it probably is!

 

 

Here are some questions you should ask the organization or counselor in your debt and credit counseling sessions. 

Learn How to Avoid Financial Scams

Don’t be a victim! Here are some tips on how to avoid financial scams. Recognize the signs of a scam. The only real solution for credit problems is to pay off your debt on time. Two common scams to avoid are:  The quick fix: Companies or services that promise to fix your credit quickly can be dishonest and expensive. No one can speed up the process. Debt elimination or reduction plans: Never sign a contract or other agreement except with a reliable counseling service, such as a nonprofit. Many people get deeper into debt after restructuring because they didn't understand the terms of the agreement. Ask questions. While there are helpful organizations out there, asking the right questions can save you major financial headache. Before you sign up with a debt management program, be sure to ask the following questions:  What is the cost? You shouldn’t need to pay anything to start.  Is it comprehensive? Programs need to include more than just one-time debt counseling, they should encourage better budget planning and realistic goals. Who is responsible? A community-based Board of Directors should guide nonprofit counseling agencies. Is it certified? Certification means agency counselors must pass tests measuring experience and knowledge. Is it accredited? The work of an agency should be certified by an outside expert, such as the Council on Accreditation of Services for Families and Children, Inc. Find legitimate help. Nonprofit financial agencies, like Consumer Credit Counseling Service (CCCS), may be able to lower your rate, eliminate fees, and help you control your debt. You can check out accredited organizations by state. Talk with a financial counselor today to find the right plan for you.  Making even small changes on your own can help you get ahead of your debt and better prepare you for financial counseling.