Worried about debt collectors? Can’t seem to develop a workable
budget? Unable to save for retirement? If these sound familiar,
you may want to consider a debt consolidation company or a debt reduction service.
- Look under "credit counseling" in your telephone directory
or your Internet search engine to find a debt consolidation company or a debt reduction service
near you.
- If you have too much debt or are unable to repay your
debt, a debt consolidation company or a debt reduction servicemay work out a Debt Repayment
Plan for you where you deposit money each month with the
debt consolidation company or a debt reduction service.
- Since some agencies charge little or nothing for managing
the plan and others charge a significant fee over time,
you need to know up front what the cost will be. Are they
non-profit?
- Repayment plans usually cover only unsecured debt (i.e.
cards, dentist). If your secured debts (i.e. car, house)
are not included , you must continue to make payments
to creditors directly.
- If you fall behind with secured debt, consider working
directly with the holder of the title yourself. Most lenders
will work with you if you’re acting in good faith and
the situation is temporary.
- Some secured lenders may reduce or suspend payments
for a short time. When you resume payments, you may have
to pay extra toward the past due total, so ask about any
fees charged for these changes.
- If selecting a debt consolidation company or a debt reduction service, interview several.
Check with the Better Business Bureau to find out if consumers
have filed complaints about the provider you are considering.
- During the initial interview find out their fee, sources
of funding, who regulates and audits their operation,
what are the counselors qualification, and what is their
formal written agreement.
- Concerning their repayment plan, ask specific questions
such as what happens if repayment is more than you can
afford and how secure is the information you provide.
- You should know if you will receive status reports and
can you access your accounts?
- Sometimes debt consolidation companies or a debt reduction service counselors can get creditors to lower or
eliminate interest and finance charges. Some agencies
have multiple plans which you should ask about.
Tips:
- A debt repayment plan does not erase your credit history.
Under the Fair Credit Reporting Act, accurate information
about your accounts can stay on your credit report for
up to seven years.
- Creditors may report an account in financial counseling,
payments missed, or that there are write-offs, etc. But
a demonstrated pattern of timely payments should help
you get credit in the future.
- A debt consolidation company or a debt reduction service counselor is the perfect person to ask about
setting up a budget and money saving tips.
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