Credit Counseling?

[princesslily]

Just wondering if anyone has ever done this? Did it work? How? Is your credit completly trashed now?

 

[thomas998]

fortunately I haven't had to do credit counseling... but you should know that there are two main types. 1. Some non-profits offer credit counseling where they sit down with people and help them understand their situation and how to budget.... these shouldn't cost anything from you. 2. Places that are really just out to make a profit on someones misery... these places may charge you a fee up front, or they may have you pay them under the pretense of you making one payment to them and they will use it to pay your debt for you... run like hell these types will keep a significant amount of your money as a fee and very little if any will go to your debt.... these will also tell you to stop paying you cc bills and then try to negotiate a lesser payment or interest charge, and while it is possible for the cc company to do that with someone that has stopped making payments, the fact is your credit history will look like poop.

I would strongly suggest you look for a non-profit organization that offers counseling... just be warned that some non-profits are really for profit and if they charge any type of fee or ask for any information from you concerning bank account numbers then they are scams. walk away and find a real one.

 

[Kidnurse]

We are finishing out debt consolidation plan with a reputable non-profit group in our area and it has been wonderful. They didn't charge us an up front fee at all but they do charge $25 a month for handling (which isn't bad considering that they helped us reduce our payments by about $400 a month!). We have paid $38,000 off in debt and have about $12,000 to go. Not bad at all. Like the previous poster said BE VERY CAREFUL!!! 99.9% of the places out there that claim to be the "good guys" are wolves in sheeps clothing. (If you call a place and they start getting pushy, then you need to follow your guy instinct and run.)

You need someone who is a member of the National Foundation for Credit Counseling. A good sign that you're in the right place is that they will sit down with you and develop a reasonable budget, based on looking at past trends and negotiating with you. Our agency also offers free public finance classes ranging on topics from personal finance, to how to save, to how to invest, to free tax preparation. While you're still paying off your debt in the consolidation plan your credit may be average to slightly below average based on how creditors look at your situation, but honestly if youre in one of these plans, during the payoff phase you've got no business trying to get new credit cards, cars etc. Besides, even if you did decide to open up some new lines of credit and didn't tell your agency about it, they run periodic credit checks on you to make sure that you're following your end of the bargain (not to open any new lines of credit).

Anyways good luck with your financial situation. We're almost done and it feels soooo good.....

 

[Moeluv4u7]

Also, keep in mind, Be very careful as to what you decide to do and what plans you may have in your future purchases- Many banks will not extend credit while you are in debt counseling- Especially now- & if you do decide to do debt counseling, and you have a mishap during that time period, it will hurt a lot more on your credit than if you were chugging along on your own and something got missed or late- Banks feel that debt counseling, although it is intended to help and should mean a smart, credible person chooses this route, Banks feel that - One- you don't have control over your money and spending to the point you needed help from an outsider to "tell you what to do" (like a kid w/ an allowance) & Two- If you have a mishap, even though at times not all of your accounts may qualify for the program- One or two mishaps, can kill you since banks feel you have not shown that you can change your previous ways- living out of your means, no control over spending & budgeting, still score as very high risk and they won't touch you-
I work in loans so I know- We have 3 banks that will do loans for people while in debt counseling- At still very high interest and/or very short term/ low advance- If you are planning to purchase by credit in the future, a few months previous to purchase, take yourselves out of program (It shows up on your credit- Acct XxxxXX- XYZ company 120000 HC 400 payment 7000 balance >>> account in credit counseling/debt counseling
They can see what accounts are included in program and what is not- Also, if any collections show up during time frame (and they likely will if you have outstanding debt that has seemed to *disappear) It is noticed!- BTW, when you join into these programs, old debtors have a way of finding out, same as when you buy a house- every old unpaid debt you had seems to start w/ the letters... Just be careful, ask questions, and decide if you can hang in for a year, get on track and get out- Mainly, you need to set a goal and stick to it!

 

[tonilea]

We tried it. I checked out the company with the BBB and it had a good rating. It went really well for almost a year and then they stopped making our payments to the tune of almost $1000 - which we still have not been able to recover. At the time it was awful - I cried all the time. We were two months behind and some (*@#&)(*&#$ lawyer stole our money. (If you hear the name Richard A. Brennan, run far, far away).

The last payments were made in July two years ago - and of course we didn't know they hadn't been made for August until the calls started... demanding money we had sent, but hadn't been paid. I called and they assured me it was a gap in the "new company" taking over and everything would be made right. Stupid me, I let them take another payment in September. Still no one got paid. I called the bank and blocked them - they tried to take money out multiple times. I even had to open a new account. We did manage to get caught up, but it was all we could to to stay afloat.

But, looking back, it was probably a blessing in disguise. In January our church announced it would be offering "Financial Peace University" by Dave Ramsey. We count it as some of the best money we ever spent. We thought we were pretty frugal people, but on the DR plan, it was clear we were piddling away a lot of money. Just a little here and a tiny bit there, but it adds up fast. In 15 months, we paid off over $13k in debt and are now debt free. (and much sooner than the consolidation plan)

I think some people have the financial "gene" - they "get" money, they understand it in a way I never could - they may say they don't have a budget - but they do, it just isn't a written one. It amazes them that the rest of us don't always get it. But, the good news for those of us who haven't always done the right thing financially is: It can be learned!

In short, I highly recommend FPU before wasting my time with a consolidation or credit counseling.

BTW, our credit is now at 700. Not perfect, but certainly not trashed.