Credit Counseling

If you aren't disciplined enough to create a workable budget and stick to it, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the counselor. As part of the repayment plan, you may have to agree not to apply for-or use-any additional credit while you're participating in the program.

Your unsecured creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable credit counseling organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the credit counselor. As part of the repayment plan, you agree not to apply for, or use, any additional credit while you're participating in the credit counseling program. A successful credit counseling plan requires you to make regular, timely payments, and averages between 48 and 60 months to complete. Ask the credit counseling service for an estimate of the time it will take to complete the plan. Some credit counseling services charge little or nothing for managing the plan; others charge a monthly fee. Some credit counseling services are funded, in part, by contributions from creditors. Over time this type of service can help you repair credit. While a credit counseling debt repayment plan can eliminate much of the stress that comes from dealing with creditors and overdue bills, it does not mean you can forget about your debts.

• You are still responsible for paying all creditors whose debts are not included in the plan.
• If your repayment plan depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, you are responsible to make sure these concessions are reflected on your statements.
• You are responsible for reviewing monthly statements from your creditors to make sure your payments have been received.

A Credit Counseling Checklist

To feel comfortable and confident with your credit counseling agency, ask these questions before deciding:

• Is this a nonprofit credit counseling agency?
• What are the total fees associated with the credit counseling services being offered? Are budget and credit education opportunities offered by the credit counseling agency? Will my funds be protected?
• Is the credit counseling agency accredited? By whom?