Credit Counseling?

[23mommy]

Has anyone used any of the credit counseling companies and if so, which one? How do you find a reputable one? Can you keep a cc (you need at least one for things like booking a rental car, etc.)?

A series of unfortunate events has gotten us to this point and it is almost impossible to get out. The cc companies won't work with you if you are trying to hold it together and get out of the situation... they will only work with you if you are several months behind in payments (which seems totally ridiculous to me.) If you are trying, you get no help. But if you just don't try at all and don't pay, they will help you.

 

[Jon99]

We are with American Consumer Credit Counseling and they have been great.. We had 4 cards with a total balance of about $30K and they negotiated 3 of our cards down to 9.9% and the other to 6%.. They charge $3 per card, so each month we pay $617, $605 goes to the CC's and their share is $12.. We were worried about what it would do to our credit scores over the long run, but ours have actually increased in the 6 months since we have started this..

They have said this will take us about 5 years to get paid off, last month of the $617, we paid about $180 in interest and $425 towards our balances, plus we always pay at least a little extra to our lowest balance card, even if its only $20..

And yes, they did allow us to keep a credit card... What we decided to do was get a new card with a limit of $1000, thus avoiding the possible temptation to run up a big balance on that one..

http://www.consumercredit.com/

 

[Nancyg56]

I think the above company was the one DS and DH cousin used. DS was never behind on payments, but was sick over bills, and he was happy with the service. He was able to keep a card open, but did not. DH cousin was also happy with the service. I know DS said that his bank told him the impact ws not negative to his credit, and he now has a very high credit score. Good luck to you.

 

[Cheshire Figment]

Ask them for the fee schedule, preferably in writing. Ask what is the amiount or percentage of your first payment which goes to their fees.

Ask what is their major source of funding. If it client fees do not use them. If they receive funding from a local United Way or some other non-profit group and the client fees are a token amount then they are OK.

Check with the local Better Business Bureau.

 

[deltachi8]

Also do remember that using Ccredit COunseling will show on your credit report and be viewed as a negative. Be very careful who you choose.

 

[MyGoofy26]

Spend some time at www.creditboards.com - credit counselors aren't doing anything more than you can do on your own, and if you take control of it yourself and use the tips on creditboards, you should be able to do it better.

 

[jojosmom]

Just be wary of credit counseling services. A former co-worker used one that charged high rates. She paid them directly just about all of her pay and they were supposed to pay the creditors; unfortunately they never paid the creditors and she was getting harrassing calls at work. Just be careful. I have personally gone to Consumer Credit Counseling for "intake" appointments but was never happy with them or their services, but they do come recommended by many places, including my mortgage company

 

[Chicago526]

I would also recommend you read Dave Ramsey's "Total Money Makeover". It really shows you how to better manage your money so you can get out of debt as fast as possible. You don't have to follow it to the letter (I don't) but it really has some great information. You should be able to pick up a used copy for not too much, or check it out from the library for free (even better!). If you use counseling or not, either way I think it could be very usefull to you.

Good luck to you! And congrats for trying to get a handle on your finances before it starts to ruin your credit and cause even more problems. The only thing worse than being in debt up to your eyeballs, is being in debt up to your eyeballs and late on most or all of your payments!

 

[MickeyMonstersMom]

Fifteen years ago, my (then) husband and I went through Consumer Credit Counseling Services - or CCCS. Their rates were completely reasonable, and they were a huge help. Not only did they get us much better arrangements than we could have convinced the credit companies to make for us, they also treated us with a dignity that I greatly appreciated.

 

[LdyFaile]

I've also used Consumer Credit Counseling Services. I paid everything off in three years. The 'bad mark' on my credit report from using the service only lasted as long as I was paying them. After that the only 'bad marks' are from the cards I was very deliquent on. But those are gone now after the usual 7 year thing. I don't know if they're still around though, I know the local chapter here got bought out by someone else. Do a lot of checking into it before you sign up. My brother tried going through them and he didn't understand that he HAD to make the payments on time else they'd drop him, which they did.

 

[FamilyGuy]

I would also recommend you read Dave Ramsey's "Total Money Makeover". It really shows you how to better manage your money so you can get out of debt as fast as possible. You don't have to follow it to the letter (I don't) but it really has some great information. You should be able to pick up a used copy for not too much, or check it out from the library for free (even better!). If you use counseling or not, either way I think it could be very usefull to you.

Good luck to you! And congrats for trying to get a handle on your finances before it starts to ruin your credit and cause even more problems. The only thing worse than being in debt up to your eyeballs, is being in debt up to your eyeballs and late on most or all of your payments!

I second this suggestion.

I have never had any personal finance issues until late last year. The company I worked for filed for chapter 11 re-organization. I went without pay for some time. Got behind on the mortgage - it was bad.

Thanks to Dave Ramsey, I am back on my feet, everything is current and both me and my DW have a newfound attitude towards money. We are really following the book and have managed to payoff the half off the debts on our debt snowball; these are all the smallest debts we have, but still, it really puts things in perspective. Becoming debt free is our goal, then we will begin to REALLY invest for the first time ever in our lives. I am so glad we found DR in our mid thirties rather than 10 or 15 years later!

Please, do read the book.

Oh, and I look at credit for a living, CC is looked upon as one step above bankruptcy. It is not a good thing. Avoid it if at all possible...

Good Luck, this wizard's sprinkling a little pixie dust hoping that it all works out for you

www.daveramsey.com

 

[summerrluvv]

CCCS is still around. We use them for credit counseling for our BK clients. Their BK counseling service is lacking, but maybe that's because it's a new thing for them, who knows.

http://www.cccsatl.org/index.asp?_method=view&sc=43&cn=486&md=debtmanagement

 

[23mommy]

Oh, and I look at credit for a living, CC is looked upon as one step above bankruptcy. It is not a good thing. Avoid it if at all possible...

Thank you all for the support and good suggestions. I took a look at Dave Ramsey's website and found it very interesting.

I do have a question on the statement above. I didn't realize that credit counseling is viewed this way on your credit report. If credit counseling is only one step above bankruptcy on your credit report, what incentive is there to do cc. Wouldn't it be better to just file bankruptcy, get a new start, and be able to sleep at night?

(I am not looking at either cc or bankruptcy lightly and don't mean to sound flip. You just get to a point where you feel trapped. I mistakenly thought cc would be a way to help people in these situations)

 

[MyGoofy26]

I don't think there is much incentive other than feeling good that you took responsibility and paid those debts. In fact, most people don't realize that credit counseling is seen as a big negative - they think as long as the bills are getting paid, it's all good. The way I read it once (and maybe someone can jump in if there's another reason) is that it 'says' that you can't handle your finances - you had to hand it over to somone to get things taken care of.

 

[Jon99]

When we went to credit counseling we were worried about the effect on our credit, but over the long haul looked like the best option.. In the 9 months since we started, our credit scores have increased and our balances have decreased..

When I talked to Chase and Citibank as well as people on creditboards.com I was told that while it would show up as a notation on our credit reports, once the the cards are paid off they would simply showed up as paid in good standing and MUCH better than either BK or negotiated settlement..

 

[FamilyGuy]

When granting credit of any kind CC will be viewed just about the same as an open BK. Home, car, or other loan. Now, after the CC is complete it will likely say on the account 'Managed by Credit Counseling' or something like that on your report. If you can document that you have completed the CC, home and car loans should, for the most part be granted the same as if the CC were not a factor.

The BK will, for the most part still affect you even after it has been completed. It stays on your report for 10 years. Most prime lenders look at it as a deal breaker in the first 2-4 years after BK. After about 5 years most lenders don't weigh it very heavily.

If you are really behind (more than 90 days past due on several accounts), then one of these may be your only option. Otherwise explore other options, you may be surprised after you take control of your money how much it can do for you.

 

[nurseypoo5]

I once had over 40,000 in credit cards due to an injury and being out of work for a year. It sucked to be us i tell ya.

I called profina debt solutions (now incharge solutions) and they set me up with a payment of 744.00 month and negotiated many of my 30% interest (late once interest kills you!!) to al low as 6% (not all tho) and some late fee's penalties down.

Anyway this was in Summer 2001, and by Summer 2005 i was totally 100% payed off!

Our credit was crappy, i believe mine was 520 and my hubbys was 580. with the help of the nice folks on creditboards.com i was able to work my credit scores up to 700 and we just bought a 3,000 sq ft home we never thought would be possible. We have a very good income its just an unfortunate accident that caused everything.

I've learned to save when i can. It was 5 yrs with no vacation etc. I never want to HAVE to use a CC again.

Oh, they do make you lose all your CC's. About 3 months prior to the final payment and after we bought our house (btw i got 5.5% interest on 100% note) I started applying for CC's because the more credit you have with the least utilization (learn this on creditboards.com) the higher your scores.

Many will say dont do the consumer credit counseling thing, but for me i was drowning in overage and late fee's...i felt i had no choice. However if you have things owned by collection agencys visit the creditboard website first. I found some of the credit agencys, one in particulair had no legal right to try to recover money from me in the state of TX. I sent a letter and the closed my account and deleted it from my reports

Oh and to respond to the previous poster who said its always looked at like a BK..thats not true, I was approved from several loan officers on my home while still under CCCS, i had more than half paid off and had my scores up. I was then approved for over 40k in credit cards while i was still in the counseling. I have a zero balance on those, and they are what you call sock drawered, meaning we rotate them once a month to buy gas only so they stay active.

BK is ok, the laws have changed and its a bigger deal and harder to get now then it used to be. I really cant brag about www.creditboards.com more in helping with stuff like this. Warning they HATE CCCS there, I'm just one who had a really good experience...but like i said i used Profina debt solutions and the were the bomb!

 

[FamilyGuy]

Oh and to respond to the previous poster who said its always looked at like a BK..thats not true, I was approved from several loan officers on my home while still under CCCS, i had more than half paid off and had my scores up. I was then approved for over 40k in credit cards while i was still in the counseling. I have a zero balance on those, and they are what you call sock drawered, meaning we rotate them once a month to buy gas only so they stay active.

There you go. You can even get a home loan & Credit cards while in CC!

I am a Finance Director for an auto dealer. Getting a car loan while in CC is very very tough - not totally impossible; but definitely an uphill battle. Good income always helps, which the quoted poster stated they had.

Dave Ramsey teaches you to live without credit (other than a home - 20% down, 15 yr max term, & 25% max payment to income); live like nobody else today, so that you can live like nobody else in the future (probably gotta read the book to get that). Funny thing is with what I do for a living, it is the total opposite of what I have come to believe. Debt is the problem in today's society. Everyone else has debt, no big deal. I think eventually a major career change may be in order for me.... currently I put people into more and more debt every day....

Again, I would not recommend CC. Obviously it does work for some though. And it is more responsible than BK. Everyone has to make their own decisions an live with the consequences.

 

[SleepingBeauty79]

Another great book that I just read and it changed my whole perspective is Young,Fabulous,and Broke by Suze Orman. She makes things so simple and I got some great ideas on how to improve our financial situation. She has a website also that you can log on to with a code from the book and get endless resources.

 

[MyGoofy26]

BK is ok, the laws have changed and its a bigger deal and harder to get now then it used to be.

Actually recent studies by various watchdog groups show that there have been virtually no changes in BK since the news laws have taken effect. A few more people have to go Chap. 11, but people are still able to file BK with miniml effort. It's just a little more expensive now, and you have to do credit counselling before and after - but the laws haven't made it any more difficult to get the BK discharged.

I guess the CC lobbyists wasted a lot of time and money getting this one passed since it hasn't increased their bottom line any.

And I'm sure once word gets out that it's not as difficult as it was expected to be that even more people will be filing.