Dealing With Debt: Credit Counseling

You see it advertised: cut your interest rates in half, get help paying off your debts. Can credit counseling help you deal with debt?

Dealing With Debt: Credit Counseling Photo (cc) by lemonjenny

Like so many laid-off Americans, Francine Adams is trying to cook up a new career. After losing her job as a systems engineer, she’s now trying to make it on her own with a line natural skin care products she created and makes herself.

But what she couldn’t do herself was get any cooperation from her credit card companies. She did the right thing: called them, told them she’d been laid off and asked for lower payments. No dice.

“It was very disappointing for me to find out that some of my creditors didn’t want to cooperate with someone that was trying to maintain a good relationship and preserve their credit.”
-Francine Adams, Credit Counseling Client

But Francine didn’t give up: she found a non-profit credit counseling organization.

“Credit counseling organizations can typically get clients one payment that’s lower than all their payments put together. Interest rates are typically lowered to around 9 or 10 % depending on who their creditors are and it typically gets people out of debt in 4 to 4 and a half years.”
-Gary Herman, Consolidated Credit Counseling Service

For Francine, it was just what she needed.

“My minimums totaled, actually, up to about $700 a month. And now with Consolidated I’m consistently paying $420 a month and that includes their fee.”
-Francine Adams, Credit Counseling Client

These programs typically take about 4 years to complete. The cost varies, but it’s normally less than 50 bucks a month. It’s not for everyone: you need to have sufficient income to pay off your debts. If you don’t, bankruptcy is the better choice. But for people like Francine, it’s time and money well-spent.

“Get into a program sooner rather than later. Because the longer your situation continues, the more stress you’re going through unnecessarily, and the more difficult it is to recover.”
-Gary Herman, Consolidated Credit Counseling Service

But be careful when you approach credit counselors. Ask them how they plan to help you and how much it’s going to cost. Talk to several. Pick the one that sounds least like a salesman and most like a true counselor.

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