Debt Counseling Solutions for Credit Repair
Ė 10 Tips on What to Watch Out For
By Sandra Wellman
debt counseling a solution for credit repair?
Counseling Services and Credit Counseling Services are
Organizations that are sponsored by most of the creditors. Most
Debt Counseling services are nonprofit organizations; however,
there are a few that are on their own. Before you can contact a
Debt Counselor, you must have some source of income. The
counselors often contact your creditors for you and alert them that you
are making the effort to repay your debts. Once the creditors have
been contacted, the organization will next work out an agreement
that works with your current budget. After a decision has been
reached you are expected each month to make a payment toward
paying off your creditors. Your money goes first to the
organization where you have asked for help, and then is forwarded
to your creditors. Once the creditors receive your money, the
Counselors ask the creditors to deduct a small amount of funds to
pay for their services. There are some debt counselors that will
waive interest on your balance, however, most counselors will not.
If you are unable to meet your payments each month, you might be
required to pay late fees. Getting the creditor off you back and
off your phone line is great, but make sure you keep up with your
payments or youíll be back in the same predicament.
to watch out for when looking for a Credit Counselor or Debt
try to help you with all your bills, even ones you already have a
low balance and or low interest Ė you may not need help with
these and you donít have to have help with all your bills, you
can just pick the ones that are really a burden.
you pay by cashiers check or money order Ė they should accept
your personal check in most cases, unless youíve bounced checks
you they will call you back if you are approved Ė there really
is no such thing as being approved. The agency may not want to
help you if your problem is very small or so big they feel you
should file bankruptcy, but thatís it.
for your credit card and bank account numbers before quoting you
for their service. Do not give them this until you have the quote
in your hands and you feel comfortable with this agency. You can
give them other information they will need like balance, interest
rate and creditor name.
wonít mail you a copy of their quote; they will only fax it to
you. Donít accept that, move on to another agency. If you want a
fax as well as mail, thatís ok.
you they will cut your payments in half. Unless you get a
consolidation loan, your payments will probably not be cut that
much. If they are, be aware exactly what kind of agreement they came
to with the creditor. Ask for specifics.
creditor will want a different payment plan Ė they all will not
be the same, so here again, get specifics on what each creditor
wants so you will know how long it will take to pay off all your
bills. Donít accept a generic answer for this, ie; 4 yrs.
agencies will not be able to handle your IRS debt and should not
if they claim to, be wary. This should be handled separately
through a tax expert.
careful if they say they can reduce the actual debt you owe for
one or more creditors. This is different than making payment
arrangement for you. If the creditor agrees to write off part of
your debt, it will remain on your credit report for 7 years. Also,
you will have to pay taxes on the amount they wrote off!
the monthly fees you will pay for each acct they have made an
arrangement for. These can vary from $10-$30 per acct per month!
youíve already tried to make arrangements on your own or you
just canít do it yourself, by all means get a credit counselor
before it gets worse. Just beware of which company you choose.