Resolutions 2012 – Finding Help With Debt

Photo (cc) by xJason.Rogersx

We’re covering financial resolutions this week and next. So far we’ve talked about money hacks and how to budget successfully. Today we’re going to explore what for many people is priority 1: destroying debt.

A newly released study from the National Foundation for Credit Counseling found only 6 percent of consumers surveyed are focusing on reducing their credit card dependency – but 62 percent say their top money goal this year is putting a dent in their debt.

If TV, radio, and Internet ads are any indication, there’s no shortage of help to do it. Commercials promise all kinds of amazing things, from cutting your interest rates in half to settling your debts for pennies on the dollar.

Unfortunately, some of these outfits overcharge and deliver less-than-advertised results – the last thing people struggling with money need. And the highest-quality nonprofit credit counselors don’t bring in enough money to allow much, if any, advertising.

In the video below, Money Talks News founder Stacy Johnson tells you what to expect from a trustworthy credit counseling group. Read on to learn how to find one.

Boil it down, and what credit counselors and others in the debt-busting business do is negotiate with your creditors on your behalf. They let lenders know you’re getting help, and try to negotiate lower rates and reduced fees. If you end on a traditional Debt Management Plan (DMP), you’ll send the agency a monthly check, which they divide up among your creditors.

The traditional DMP plan involves repaying your debts in full over 3 to 5 years. A prerequisite in most programs is forsaking credit cards entirely throughout the process. But talking to a credit counseling organization doesn’t require enrolling in a DMP: Quality organizations provide advice and assistance free of charge.

So if you’re in over your head, here’s how to locate reliable help…

  1. Check accreditation. If you’re going to seek help with debt, make sure those doing the help are genuine counselors, not salesmen. One way to do that is to ask whether their counselors are accredited. As Stacy said, one of the best accreditations is issued by COA, short for Council on Accreditation. You can find their sorted-by-state list of accredited agencies online. Other good sites to check: The National Foundation for Credit Counseling, the Association of Independent Consumer Credit Counseling Agencies, and the relatively new Association of Credit Counseling Professionals all allow you to search for member organizations.
  2. Check prices. Like Stacy said in the video above, advice should be free. Even if you end up on a Debt Management Plan, there should be no up-front fees, and whatever they do charge after the fact should be fairly low. The NFCC says: “Any set-up fee or monthly fee should be reasonable, usually defined as $50 or less, with monthly fees in the $25 range. The agency should be willing to waive all fees in cases of true hardship.” If you find there’s more than one reputable group in your area, you can compare rates.
  3. Ask questions. Besides credentials and cost, responses to some basic questions can be telling. Try these: Will your help hurt my credit history? What’s the minimum debt you work with? How long are sessions? These questions and their answers come from the NFCC site, which has several more. A good agency will tell you that a lengthy session (an hour or more) may be necessary to hash out your income, expenses, and debt. They’ll offer to help with debts of any size, and to work with all of your creditors. They’ll also admit their help might show up on your credit report, but won’t hurt your credit score.

As with any relationship, the more questions you ask and the more people you talk to, the better you’ll be able to make an informed opinion on who best will meet your needs.

If the traditional credit counseling relationship doesn’t sound appealing, you can always try to negotiate debts yourself. But when it comes to getting help with debt, you should expect an honest assessment of your situation and options, at a price that doesn’t add to your debt.

Watch out for groups that make big promises for big fees, and especially those that claim to settle debts for pennies on the dollar – they’re usually too good to be true. Check out our stories Should You Consider Debt Settlement? and Debt Settlement Industry Defrauds Consumers for more on the risks.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
11 Signs That You Chose the Wrong Place to Retire
11 Signs That You Chose the Wrong Place to Retire

Health and happiness in retirement rely on some key factors.

30 Purchases That Will Start Saving You Money Immediately
30 Purchases That Will Start Saving You Money Immediately

Sometimes, you’ve got to spend to save. These canny deals are a good bet for savings.

Small Splurges That Make It Feel Like You’re Living Large
Small Splurges That Make It Feel Like You’re Living Large

Cutting costs is the shortest path to financial freedom. However, there are times when a little spending can produce big returns.

8 Reasons Your Parents Had an Easier Retirement Than You Will
8 Reasons Your Parents Had an Easier Retirement Than You Will

Here’s why the last decades of life are harder now than they used to be.

10 Ways to Nail Savings on Your Remodeling Project
10 Ways to Nail Savings on Your Remodeling Project

Here’s how to save on your next remodeling project with discounted materials and more tips and tricks.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

Why Cloth Masks May Increase Your Coronavirus Risk
Why Cloth Masks May Increase Your Coronavirus Risk

A new study finds that wearing a cloth mask can backfire if you don’t clean it properly.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.