Credit Card Debt Counseling

A large percentage of Americans are carrying too much debt. With the slowing economy, rising unemployment rates, and slowing of bonuses and other income, many people are finding themselves having a hard time making ends meet. One way to ease up on the family budget is to lower or eliminate credit card debt. There are a number of ways to do that. I used a credit card debt counseling program to eliminate my debt. It took some hard work and some changing the way I deal with money, but it has been worth it. 

There are a lot of credit card debt counseling agencies for you to choose from. One warning is that these agencies require your personal information, including your social security number, financial account numbers and drivers license number. Be sure you are working with a reliable company. One way to check the background of a potential company is through the BBB. Plus, if they only do business on line and you don’t have the option to meet initially in an office, choose another company.

So what should you expect if you choose a credit card debt counseling program? First, recognize that the company, whether it is for profit or nonprofit, is trying to help you not only get out of debt, but also change the way you deal with money to avoid getting in too deep again. You will likely have to take some classes and spend time with a counselor discussing some of your spending habits. They will challenge you about the different areas where you spend money.
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our initial visit will likely be filling out paperwork and helping your counselor understand where you spend your money and what your priorities are. Some of the things people call extras are not extras to other people, they are necessities. Every family’s situation is unique, and if your counselor is to help you, he has to know what is important to you.

On that first visit, you will put together a complete list of all your creditors and how much money you owe each one. You will also look at how much interest, late fees, and over limit fees you are paying each month. This may be the first time you put pen to paper to look at your real situation. Brace yourself. It can be a real eye opening experience!

Once all your debts are on paper and the counselor knows exactly what you are dealing with, he will propose a plan. You may have to return for a second visit, because it can take some time to prepare a plan. Plus you may want a few days to recover from the near heart failure that came with seeing your debt in black and white.

Once a plan is developed, your counselor will talk with you about the ways he thinks are the best for chipping away at your debt. Sometimes the counselor will call your creditors before the plan is presented to you so you know precisely how far each creditor is willing to bend to help you eliminate the debt. Other times the company has done so much work they already know what help each creditor is likely to offer, so they talk to you first. Be sure you know what part of the plan they give you is already confirmed with lenders and what part is speculation. Usually they are right about their speculation, but you don’t want to have your expectations unmet.

When you sign your agreement and agree to your debt repayment plan, your accounts will likely be closed. You will not be able to use credit cards anymore, so be prepared to live by the budget you created with your counselor. If you cannot abide by the agreement, the company will likely cancel a repayment service, and you will be back to dealing with each creditor individually. They will cancel all arrangements, and your interest, late fees and over limit fees will go right back to where were before. If you are not able to live by the budget created with the counselor, don’t agree to the repayment plan. 

Realize that the repayment plan is different from the counseling services. Usually the counseling services are free. When you use the repayment plan the counselor has developed for you, there will probably be a fee built in to cover the cost of the agency in performing this service for you.

For those whose income is so small that they can’t even make small monthly payments on their debt, credit card debt counseling services may not be the best option. But if your monthly income is just short of being able to keep up with rising interest rates and fees, a credit card debt counseling service may be just right for you. Learning to live on the money we make is becoming more and more important as the economy struggles. Pay down current debt and don’t create any more debt, and you will find yourself weathering the economic storm more easily than those who are carrying large debts.

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