Managing your
debt
A
debt management plan can be your saving grace if you find yourself in
serious debt. It is hard to dig yourself out of such situations without a
set and effective strategy. If you cannot seem to get on track by yourself
you can always call on a reputable credit counselor. These counselors can
do a lot to help you find the best ways to deal with
your debt management problems. If you
do choose to go this route you need to find debt counselors who are
certified to help you, this includes certifications for consumer credit,
money management, debt management and even budgeting. Without this
training and these certifications they are not going to be of much use to
you.
Never assume that all credit and debt
counselors have this sort of training because they don't. In fact many of
these companies are scams designed to get their hands on what little money
you have left. You could find yourself facing some hefty fees if you get
entangled with one of the untrustworthy counseling services. You need to
make sure that the service you are using is a reputable one. Always check
with the Better Business Bureau in your area in order to find out about
the company or service.
Some credit counseling services are
non profit organizations and these are required by law to work hard to
educate you and help you to make the decisions that are right for you and
your family. The bad services will simply take your money and leave you in
worse debt than when you started the process of debt management. You
should never have to pay significant amounts of money before any work gets
done to help you. If you are getting hit with large up front fees then
this is a good clue that you are not working with a good credit and debt
counseling company. The Federal Trade Commission (FTC) does it's best to
protect consumers like you from these scam artist but there is only so
much they can do. Often it is hard to find these fraudulent companies and
services before they take advantage of someone and they are reported for
it.
A debt management plan is a great way
for you to get your debts under control. This is an especially good option
if you have many different debts. It can be difficult to keep track of
them all and with a debt management plan most of the work will be done for
you. You will send the counseling service a lump sum payment that they
will then split up and send to the appropriate parties. A good and
reputable credit counseling service will contact your creditors to work
out the best schedule. Really good services will even be able to get your
interest rates lowered and perhaps your payments lessened if you are
having trouble with your finances. Having your creditors know that you are
paying through a debt management program can
be a good thing as they are
often more willing to be flexible.
If you are involved with a debt
management program then you need to be keeping an eye on your bills and
statements each month. It has been known to happen that the credit
counseling services will steal the money that was sent to them and never
pay a penny of the actual debts like they promised. It is important for
you to be double checking to make sure that you money is going where it
needs to be going. It is a good idea for you to phone your creditors
directly before you ever send a payment to the debt management program.
This way you will be able to confirm that your creditors have spoken to
this company or service and that they have agreed to the terms that were
laid out to you by your counseling service.
If your creditor is fully willing to
work with you to manage your debts and get them paid off then you need to
be sure to hold up your end of the bargain. You will need to always pay
your payments on time. This means every month on the same day, or even
early. As mentioned, keep an eye on your bills and statements to assure
that your creditors are being paid according to schedule and if for some
reason you must miss a payment let the service in charge of your debt
management program know immediately, the sooner the better. These are your
responsibilities. If your payments are not being made on time by the debt
management program then you are not progressing, as you need to be in your
program. Your credit will not be getting better as it should if all your
payments are late. Instead of giving you a lower interest rate you could
find that your creditors will raise your interest rate again because you
are not being dependable. It does not matter to them that it is the fault
of the debt management program and not you. It is your debt and your
responsibility. If however you do notice that this is happening or that
the payments are not being made at all you need to contact your creditor
immediately to explain the situation to them. Apologize and make it clear
that this will not happen again. If you notice and contact them right away
they will be much more forgiving.
Credit counselors do go out of
business and not only because they are not good at what they do. So what
do you do if yours quits? In all probability if your debt counseling
service is going out of business you will get some sort of notice or
other. Whether it is from the company themselves or a third party will
depend on the situation. If they are being closed down due to unethical
practices then there is a good chance that you will get a letter from a
third party.
There are some steps that you need to
take when and if you find out that your credit and debt counseling company
is going out of business. First of all you need to get in touch with your
bank right away. You need to put a stop on all of the payments that might
be ready to be put through to the service. And you need to take the steps
needed to start paying your creditors directly each month. This will mean
keeping track of when all of your separate payments are due. The next
thing you need to do is get your hands on a copy of your credit
report. Then you will be able to track every late payment or missed
payments. You can consider asking your creditor if they will remove the
evidence of the late payments. They do not have to do this but if the know
about your situation and the have proof that you are telling the truth
they might just do it for you. You have nothing to lose by asking so go
for it. Just make sure that you get in contact with your creditors right
away or they will not care about your circumstances, they will simply up
your interest rate and charge you all kinds of fees.
Before you choose the credit and
debt counselor that is right for you, you need to interview each service
in order to find the one that suits your needs best. You need to find a
place that will take all of your concerns into consideration and that will
take the time to teach you how to manage your debt properly. You can find
out what you need to know by asking some simple questions.
The first question that you need to
ask is what kind of services does the company offer. Finding out what they
do is an obviously important step because that is how you will know if
they can help you with your specific needs. You want your final decision
to be a company that will offer you many different benefits, such as
budget counseling classes and classes to help you learn to deal with money
and debt. All of their counselors should be certified in all of
these things so that they can offer you the best service possible. A good
credit counselor will go over all of your financial concerns and
difficulties. They will go through all of your finances with a fine
toothed comb in order to find the best strategy for dealing with your
problems. You will be meeting with your counselor from time to time to go
over everything and to discuss any additional concerns that you may
have.
If the company that you have talked
to are too gung ho for you to get into a debt management program then you
should consider this a red flag. This should not be the first thing that
they think of. A debt management program is not for everyone and they
should not be steering you in this direction until they have gone over all
of your options.
You will also need to find out if the counselors are
licensed in your state. Just because they are in one state does not mean
that they are in all states, in fact there is a good chance they are not.
They should also be willing to give you information about their programs
with no charge. Good services will even be willing to give you helpful
info for free as well. You want a
service that has your
best interest at heart, not their own.
Before you sign any contracts you
need to meet with the credit and debt counselors and if you have any
questions get their answers in writing. If it is not in writing it is not
worth anything. Make sure that the contract you sign covers all of the
bases. There are several places that you can go to get information on the
company that you are thinking of choosing and you should make a visit to
each to check on this service. You do not want to be taking any chances
with your debt and your credit. You can check your local Better Business
Bureau, the Attorney General, as well as your local consumer protection
agency.
And at the top of your list of
questions you need to have their fees. What are they going to cost you?
You do not want to go into debt to get out of debt, that does not make
much sense does it? Get a list of all their fees and prices in writing
right up front. Make sure that the list you receive has all of the fees on
it, ask about any hidden charges. If they are charging you too much then
they are obviously only in it for their own interests. Reputable
counseling services will not ask you to break the bank. Make sure to ask
them how they get paid, is it on commission from the creditors? How
else?
And last but definitely not least
you need to find out what this company is going to do to protect your
privacy. This is very personal information and you need to have assurances
that they are being dealt with
properly.
