Credit Counseling Services

[coinkc]

A friend of mine has come to the realization that she needs some help to get out of debt. She is looking for a credit counseling service that can help her get her expenses in control and start paying down her debt.

Does anybody have any experience with these kinds of places? How do you know if they are legit or not? Any agencies you can reccommend?

She knows that it is going to be a tough road but seems to be ready to take on the challenge.

 

[minkydog]

Consumer Credit Counseling. My DH has been in the credit bureau business for over 20 years. He recommends this group, and ONLY this group. If the service requires money up front, move on. CCC is well-respected in the credit business and will go to bat for you with creditors. Tell her not to pay to have her credit "fixed"--it can't be done. Her credit is her credit. CCC can keep things from getting any worse.

 

[DisMN]

We tried 3 different consumer credit counselling groups and each time we were told we should file bankruptcy. They were through Lutheran Social services and other highly recommended groups.
They wouldn't help us with our debts and advised us all 3 times that we could not make paying back our debt work for us. Granted our debt is pretty high due to it being mostly business debts intermingled with several long term layoffs and deep pay cuts.

We are now with a debt management company that has been great to work with and very willing to guide us through this mess. The company is CareOne but have your friend know there are two sides to this debt thing. You can pay back the debts in full = Management. Or you can pay back a portion of the debt = Settlement.
Settlement is as close to bankruptcy as you can get. Settlement still involves lawyers and lots of time, money and stress and a completely trashed credit rating.
If your friend wants to make the effort to budget tightly and pay back their debts I would recommend debt management. Our debts are scary high but they didn't turn us away......and barring any huge emergencies, they believe we can indeed finish the program.

Good luck to your friend!!

By the way did anyone ever notice how Creditor rhymes with Predator?

 

[torinsmom]

I have done this through a company called Balance Financial Fitness Program. I don't think I can post a link, but you can do a google search. Because I am a credit union member, the service is free. They coordinate with all your creditors to get the interest rates reduced. You send one payment to them and they pay the creditors each month. Most of my interest rates went from around 20% to 5% and I got out from under the debt within 3 years. They also did a whole budget worksheet and suggested areas for me to cut.

 

[mulderxcoltrane]

I have done this through a company called Balance Financial Fitness Program. I don't think I can post a link, but you can do a google search. Because I am a credit union member, the service is free. They coordinate with all your creditors to get the interest rates reduced. You send one payment to them and they pay the creditors each month. Most of my interest rates went from around 20% to 5% and I got out from under the debt within 3 years. They also did a whole budget worksheet and suggested areas for me to cut.

Can you explain how this application process worked?

Does this method harm your credit?

Does your amount of debt stay the same, but your interest rates are lowered?

 

[mulderxcoltrane]

We tried 3 different consumer credit counselling groups and each time we were told we should file bankruptcy. They were through Lutheran Social services and other highly recommended groups.
They wouldn't help us with our debts and advised us all 3 times that we could not make paying back our debt work for us. Granted our debt is pretty high due to it being mostly business debts intermingled with several long term layoffs and deep pay cuts.

We are now with a debt management company that has been great to work with and very willing to guide us through this mess. The company is CareOne but have your friend know there are two sides to this debt thing. You can pay back the debts in full = Management. Or you can pay back a portion of the debt = Settlement.
Settlement is as close to bankruptcy as you can get. Settlement still involves lawyers and lots of time, money and stress and a completely trashed credit rating.
If your friend wants to make the effort to budget tightly and pay back their debts I would recommend debt management. Our debts are scary high but they didn't turn us away......and barring any huge emergencies, they believe we can indeed finish the program.

Good luck to your friend!!

By the way did anyone ever notice how Creditor rhymes with Predator?

Did CareOne negotiate with your lenders to get your interest rates reduced?

 

[DisMN]

Did CareOne negotiate with your lenders to get your interest rates reduced?

Yes! Our interest rates were 17% up to 30%. Now our rates are drastically reduced. Most are now between 3-8% and two of them are now at 0%. Our payments also went down slightly on most accounts. Remember, I said our debt was very high but we're now paying $300 less per month overall and our sky high interest rates are relatively *normal*.

All the consumer credit counselling services we had tried needed similar info as bankruptcy. My husband is an only child so his name is on his mothers bank accounts, her house, insurance and the like.......we weren't happy with the very distinct possibility that she'd have to turn over some of her *stuff* due to us just because we filed bankruptcy. Not cool.

CareOne is working with our current income and a realistic budget. Things are going to be tight for quite some time but the important thing to us was that we pay our debts in full and within a timeframe where we'd out live the debts. One of our creditors calculated that it would take 72 YEARS to pay off the debt making the minimum payments (interest rate 24.99%). LOL Yeah....right. LOL

Consumer Credit works I think for most people....so don't discount that as a first option! We were just too far gone for them to help us.

 

[torinsmom]

Can you explain how this application process worked?

Does this method harm your credit?

Does your amount of debt stay the same, but your interest rates are lowered?

I spent about an hour on the phone with a counselor. She went over all my income/assets and expenses and the details of all my unsecured debt. Then she told me my options, one of which was debt consolidation. The amount of debt stays the same, so you are paying your creditors everything you owe them. The interest rates are lowered and you are required to close all your accounts.

As far as hurting credit, it will be noted on your credit report that you are working with a credit counselor, so that could keep you from getting credit. Once you're done with the plan, that notation will come off, and the counselor said that most people's scores will actually increase because of the lowered debt. For me, it was a no-brainer. I was up to date with all my payments, but only able to pay minimums. I saved $15,000 in interest alone.

 

[canopynut66]

A friend of mine has come to the realization that she needs some help to get out of debt. She is looking for a credit counseling service that can help her get her expenses in control and start paying down her debt.

Does anybody have any experience with these kinds of places? How do you know if they are legit or not? Any agencies you can reccommend?

She knows that it is going to be a tough road but seems to be ready to take on the challenge.

was in banking and finance for 40 years and do not pay anyone up front or monthly to "help" you get out of debt. call your BBB and ask them for local consumer counseling service . New laws are coming out to cover all these so called "help with debt places" matter of fact. Here in our town we have a place that "uses consumer counciling" in their name and they are not related in any way to the legit one. and another uses collections for better business bureau and not related to BBB so be VERY careful with these places.
Be very careful as some want people to be 30 to 120 days behind in payments before they even will help you-- just adding more problems.:

 

[DisMN]

was in banking and finance for 40 years and do not pay anyone up front or monthly to "help" you get out of debt. call your BBB and ask them for local consumer counseling service . New laws are coming out to cover all these so called "help with debt places" matter of fact. Here in our town we have a place that "uses consumer counciling" in their name and they are not related in any way to the legit one. and another uses collections for better business bureau and not related to BBB so be VERY careful with these places.
Be very careful as some want people to be 30 to 120 days behind in payments before they even will help you-- just adding more problems.:

There are legitimate places that charge a nominal fee for their services, some monthly and some a one time payment up front.
Any company deliberately having the person go late on their payments is looking to *help* them do a debt settlement. Settling with the creditors is almost identical to going bankrupt in what it does to your credit and your life.

Debt management = pays back full amount with lowered interest rates. your credit takes a hit for a short while. creditors stop calling or don't call at all. creditors work WITH debt management to help their customers pay off their debts.

Debt settlement = pays back a fraction of what is owed. you now have to claim what was written off as income on your taxes. you trash your credit for half a dozen years or so. you get multiple calls daily from creditors asking where your payment is. you often get sued by your creditor because you haven't made any payments. lots of stress.

 

[mulderxcoltrane]

Yes! Our interest rates were 17% up to 30%. Now our rates are drastically reduced. Most are now between 3-8% and two of them are now at 0%. Our payments also went down slightly on most accounts. Remember, I said our debt was very high but we're now paying $300 less per month overall and our sky high interest rates are relatively *normal*.

All the consumer credit counselling services we had tried needed similar info as bankruptcy. My husband is an only child so his name is on his mothers bank accounts, her house, insurance and the like.......we weren't happy with the very distinct possibility that she'd have to turn over some of her *stuff* due to us just because we filed bankruptcy. Not cool.

CareOne is working with our current income and a realistic budget. Things are going to be tight for quite some time but the important thing to us was that we pay our debts in full and within a timeframe where we'd out live the debts. One of our creditors calculated that it would take 72 YEARS to pay off the debt making the minimum payments (interest rate 24.99%). LOL Yeah....right. LOL

Consumer Credit works I think for most people....so don't discount that as a first option! We were just too far gone for them to help us.

What are their fees?

 

[DisMN]

What are their fees?

I believe it depends on what your creditor payments end up being or how much you owe. The fees are NO MORE than $50 per month but most people are well under that amount. I've seen people mention $5.00, $7.00 and $20.00. Well worth it IMHO just for the reduction in interest rates.
We tried re-negotiating our interest rates with our individual creditors ourselves but they flat out refused to work with us. Jerks.

 

[mulderxcoltrane]

I believe it depends on what your creditor payments end up being or how much you owe. The fees are NO MORE than $50 per month but most people are well under that amount. I've seen people mention $5.00, $7.00 and $20.00. Well worth it IMHO just for the reduction in interest rates.
We tried re-negotiating our interest rates with our individual creditors ourselves but they flat out refused to work with us. Jerks.

Sorry for all the questions.

Do they do a credit check? Or do they just ask income questions?

Are payments made to them?

Is there any type of contract involved? (I only ask b/c I've read some reports online where after a management plan was established, someone's credit card company mailed them a letter for back-interest and legal fees and basically "broke the deal."

 

[eab]

I went thru Money Management but it was consumer credit that handled it. I paid I think $80 or $100 extra the first month and after that it was $40 that they took for their fee. Most of my interest rates were either 0. 2 or I think one was 9.9. I would not hesitate to recommend this. I wish I had done it sooner.

 

[DisMN]

Sorry for all the questions.

Do they do a credit check? Or do they just ask income questions?

Are payments made to them?

Is there any type of contract involved? (I only ask b/c I've read some reports online where after a management plan was established, someone's credit card company mailed them a letter for back-interest and legal fees and basically "broke the deal."

Questions are fine especially when there's so much misinformation out there!
How do you mean a credit check? I don't think your credit rating makes any difference to them. Of course once you give them certain info they immediately can access your debt information, which was fine with me.

Yes, they asked income questions and even walked me through some of it. We didn't have to show proof of income although again I'm sure they have it via our SS#.

Yes, payments are withdrawn from your bank acct BY the management company and then 8-10 days later distributed to your creditors. There are lots and lots of little piddly details to work out and you would want to stay involved the entire process. People I see who fail do so because they just leave it up to the management company to take care of everything. Also the ones I see not making it through the program have gone the riskier settlement route.

There is no contract per se but you do have to give various permissions to the management company.....pretty straightforward though. I'm seeing people having been enrolled for 5+ years who haven't had problems like you describe unless, again, they did the settlement. The two terms OFTEN get mixed up. In fact what you describe does sound like settlement problems.

Best of luck in whatever decision you make.

 

[DisMN]

I went thru Money Management but it was consumer credit that handled it. I paid I think $80 or $100 extra the first month and after that it was $40 that they took for their fee. Most of my interest rates were either 0. 2 or I think one was 9.9. I would not hesitate to recommend this. I wish I had done it sooner.

That's wonderful to hear that you were satisfied! I wish we had discovered this YEARS earlier as well.
See our problem is that we believed all the misinformation that was out there....

Thanks for sharing your experience!

 

[torinsmom]

With the BALANCE program I mentioned, there is a fee for some people. There is no fee if you bank with some credit unions. They do have a worksheet on their website that is great to use for documenting your income, assets, and debts.

They did do a credit check, just to compare what I told them with what the actual creditors were.

I did have to sign a contract that states what the creditors agreed to do. I had to change all my due dates(because they send payment to the creditors the 15th of the month) and close the accounts. I was told that the creditors can change their minds about agreeing for 90 days and after that, they are locked in, as long as you make your payment.

 

[mulderxcoltrane]

Questions are fine especially when there's so much misinformation out there!

I browsed Care One's FAQ about Debt Management and it says: "You may not take on any additional debt while on the program."

Does this mean we couldn't keep one CC open in case of emergencies?

 

[mulderxcoltrane]

That's wonderful to hear that you were satisfied! I wish we had discovered this YEARS earlier as well.
See our problem is that we believed all the misinformation that was out there....

Thanks for sharing your experience!

Does CareOne give you a detailed estimate of what your monthly payment would be as well as how long it would take to pay everything off?

If so, do they do so before you have to sign up?

 

[DisMN]

I browsed Care One's FAQ about Debt Management and it says: "You may not take on any additional debt while on the program."

Does this mean we couldn't keep one CC open in case of emergencies?

Don't quote me on this but I'm of the understanding that most cc companies will request/want you to cancel all your cards. Bank Of America might not even work with you if you try to keep a credit card. I see their point I guess.
Problem is, not all creditors work with debt management and some won't budge even a little bit on interest rates or helping the customer lower their payments.
We have one creditor that does not work with CareOne. Period. Just doesn't. We took that company off the plan and are paying it off ourselves. We haven't closed the card but we don't plan to use it either. (we actually haven't used any of our cards for several years....but over the past two years each card increased the interest rates to the point where the interest now charged is more than your payments. We were going backwards every month and not even using our cards. Jerks.

Does CareOne give you a detailed estimate of what your monthly payment would be as well as how long it would take to pay everything off?

If so, do they do so before you have to sign up?

We got a fairly accurate estimate of our payment and amt of time it would take....but just so you know, I think, not positive but I think there's a point where they would say your income can not support paying back this debt. I think we were on the edge of having that happen.
Yes, you get the info before you sign up. After you sign up there is no obligation to stay with the program. You can drop out any time and I don't believe there are any penalties for doing so except what may happen to the benefits you recieve from the CC companies by being in a DMP.

Every single person I have dealt with there has been up front and very helpful.

You asked earlier about a credit check...I would assume they DID run one on us but we didn't really give a rip. We fully expect our rating to go down for a while but who cares? Honestly, it's a moot point when all you want to do is pay down your debt. There'll be time to worry about credit ratings another day.