Free debt counseling services?

[Aisling]

My sister has confided in me that they have $50,000 in high interest credit card debt. I have no idea what to tell her, but then I thought if there's such a thing as a free financial counseling service that can help her understand the way the cc companies work and how to ask them about reduced payment plans. She basically needs advice from them. She and I have googled, but can't tell which ones charge fees and which ones do it for charitable/non profit reasons. I feel for her, but also feel helpless. I was in some debt last year, but not NEARLY as bad as she was in, have paid it off after negotiating having my interest rates lowered. She's ready to call her creditors to make arrangements, but wants to talk to a professional first.

Any advice?

 

[bsusanmb]

You really have to be careful as you have discovered, many are just money making schemes.

Consumer Credit Counseling Services has been around for years and years. They are now nationally known as Apprisen. You can find them at Apprisen.com.

They will work out a financial plan, negotiate low interest rates, stop over limit and late fees with all creditors. They charge a nominal fee. I paid $25 a month for them to pay off all of my cc's, and lower interest rates from 18-25% to 7%. They paid everything and I didn't have to worry about it. Out of debt and have only one cc. Wonderful to work with.

best of luck

 

[mom2d&b]

I second CCCS ( consumer credit counseling services). We used them and they were great. No pressure, took their time explaining all of our options. We met with them 5 or 6 times to work on our budget and options. We finally did the neogiations on our own but I am now using them to help with our mortgage issues.

 

[Cheshire Figment]

Another good source, especially for references, is www.creditboards.com which is a group of discussion forums similar to DisBoards.

 

[Aisling]

Thank you! I keep telling her it's not the end of the world, and these references are giving her hope!

 

[Planogirl]

I can vouch for Consolidated too. They charged DH $5.00!

Tell her not to pay or at least pay very little. Good counseling services should be able to set up payment plans at very low interest.

 

[Aisling]

I can vouch for Consolidated too. They charged DH $5.00!

Tell her not to pay or at least pay very little. Good counseling services should be able to set up payment plans at very low interest.

Do you mean consolidation in general or an agency called Consolidated?

She looked up CCCS (Apprisen), but they don't have branches anywhere near her. She lives in upstate NY, a village called Coxsackie, which is 30 minutes from Albany. Even the online service they offer doesn't list NY State. But they had a phone number to call where they would refer her to another agency.

I just hope it works out for her, and I hate to sound selfish, but her stress is becoming mine as well as she calls me every day in a panic. I'm leaving for WDW in 4 days and I feel guilty, but it's a birthday trip using the free ticket Disney gives to Birthdayers, my frequent flyer miles, and my Disney Rewards points to pay for two nights. If I were paying for it, I'd want to just give her the money and cancel my trip, but honestly it wouldn't even make a dent.

Thanks again. It's insane how many people are going through this, as I've learned doing research.

 

[NYCDiane]

Is she behind on her debt? Or just overwhelmed with the amount of debt/payments?

I don't like those consumer credit "counseling" places... .they're taking your money to do something you can do yourself (and use that $25 to pay toward your debt!). Most of them will tell you to NOT pay your bills for 3 months --- this way, you're so far behind, there's no way you're going to be able to catch up and they "have" you.

Another thing, these companies are not all reputable. Many will take your money and put it in "escrow" and not pay anything on your accounts at all. They just tell you to tell the debt collectors to stop calling you and to call them. Meanwhile, you have no idea that they're doing nothing or paying so little on your accts that it's getting you deeper into the hole.

Whether she's behind right now or not, she can easily get out of this herself. All she has to do is:

1. Sit down, make a list of all her CCs, acct #s, balances, APR, current monthly pmt, and the customer service number.

2. Call all the companies and speak with an ACCOUNT MANAGER and NOT a Customer Service Rep. You tell the CSR you need an account manager. If they give you a hard time, ask to speak to their supervisor and tell the supervisor you want and account manager (the CS Supervisor CAN'T help you). If you happen to get a call center in India/Pakistan (which you probably will, DEMAND to speak to someone in the US; don't tell them why you're calling)

3. Once you're on the phone with the acct manager, tell them your situation. Tell them you want to pay this off but can't do it with the current terms. Tell them you're prepared to pay $____ per month but you NEED them to dramatically reduce or eliminate the interest charges each month. (she should know in advance what she can afford to put toward each card, each month and know she can stick to that)
Most companies will agree with you. They will close out the account and allow you to do a payment plan to get the card paid off. They'd rather have you pay it with no interest than not pay it at all.

4. If you're behind on your debt and can make 1 large payment, call the company and ask if they will settle. Many will settle for 30% of the current balance. It will appear on your credit report at "settled" but so what? Your credit report is already screwed up by you being behind on the debt.


I'm pretty well-versed in all this having worked in the industry. If you need any more info, just drop me a PM.

 

[Bbbethei]

Is she behind on her debt? Or just overwhelmed with the amount of debt/payments?

I don't like those consumer credit "counseling" places... .they're taking your money to do something you can do yourself (and use that $25 to pay toward your debt!). Most of them will tell you to NOT pay your bills for 3 months --- this way, you're so far behind, there's no way you're going to be able to catch up and they "have" you.

Another thing, these companies are not all reputable. Many will take your money and put it in "escrow" and not pay anything on your accounts at all. They just tell you to tell the debt collectors to stop calling you and to call them. Meanwhile, you have no idea that they're doing nothing or paying so little on your accts that it's getting you deeper into the hole.

Whether she's behind right now or not, she can easily get out of this herself. All she has to do is:

1. Sit down, make a list of all her CCs, acct #s, balances, APR, current monthly pmt, and the customer service number.

2. Call all the companies and speak with an ACCOUNT MANAGER and NOT a Customer Service Rep. You tell the CSR you need an account manager. If they give you a hard time, ask to speak to their supervisor and tell the supervisor you want and account manager (the CS Supervisor CAN'T help you). If you happen to get a call center in India/Pakistan (which you probably will, DEMAND to speak to someone in the US; don't tell them why you're calling)

3. Once you're on the phone with the acct manager, tell them your situation. Tell them you want to pay this off but can't do it with the current terms. Tell them you're prepared to pay $____ per month but you NEED them to dramatically reduce or eliminate the interest charges each month. (she should know in advance what she can afford to put toward each card, each month and know she can stick to that)
Most companies will agree with you. They will close out the account and allow you to do a payment plan to get the card paid off. They'd rather have you pay it with no interest than not pay it at all.

4. If you're behind on your debt and can make 1 large payment, call the company and ask if they will settle. Many will settle for 30% of the current balance. It will appear on your credit report at "settled" but so what? Your credit report is already screwed up by you being behind on the debt.


I'm pretty well-versed in all this having worked in the industry. If you need any more info, just drop me a PM.

I think you're confusing credit counseling with debt settlement. Debt settlement can certainly be trouble for many reasons. However, a reputable credit counselor who is licensed by the NY Banking Department would never tell you to stop paying your bills for three months.

 

[arminnie]

There are some really, really bad agencies that do the things that bbbethei mentioned, but CCCS is not one of them.

CCCS is partially funded by the credit card companies so they do have more leverage in negotiating lower rates.

A reputable company will not tell you to quit paying your bills.

 

[NYCDiane]

I think you're confusing credit counseling with debt settlement. Debt settlement can certainly be trouble for many reasons. However, a reputable credit counselor who is licensed by the NY Banking Department would never tell you to stop paying your bills for three months.

Yes, you're right. However, I wouldn't pay anyone $25/mo to do something I could do for myself. Additionally, is that going to change her thoughts/behaviour?? By giving it all over to a 3rd party, you're not taking any responsibility for what you've done (racking up 50k in debt) and you're not getting your hands dirty cleaning up your own mess. You're just pushing it off to the side and learning nothing.... the chances of you racking up debt like this again are very good since you don't truly understand the consequences.

I am also of the "Give a man a fish, feed him for a day. TEACH a man to fish, feed him for a lifetime" school.

 

[richs52]

She looked up CCCS (Apprisen), but they don't have branches anywhere near her. She lives in upstate NY, a village called Coxsackie, which is 30 minutes from Albany.

Another Upstate New Yorker here in Albany. She could try CCCS -Consumer Credit Counseling Services of Central NY. They have an office in Albany. Here is their link -

http://www.credithelpny.org/index.asp

Best of luck

 

[GoldieSaysMeep]

Credit counseling services can not ever guarantee that creditors will work with them. Also, be aware that they are even less likely to work with her if she is on time with her payments. Often, these places will have her pay them directly and they will then pay the creditor. Sometimes, they will purposely be late on a payment so the creditor will negotiate. I’ve *heard* even the supposed reputable companies will do this. Getting a lower interest rate these days is next to impossible if you pay on time. Sad, but true. They need all the money they can get from people who actually pay.Also, they will close the account. They will make her promise not to get anymore credit for a long time. Her credit score will be damaged.

If this is her only option, then fine. But be aware there are negatives to doing so as well.

Can she check with a credit union locally to see if they can do a consolidation with a lower interest rate? How about balance transfers to lower interest cards? Maybe split between 2 or 3? Depending on her credit score, this could be impossible though.

I do not like credit boards.com. I went there once seeking advice about something and was met with some seriously rude responses from people who got nasty that I didn’t understand their lingo and abbreviations. Unless your sister wants to read through 100 pages of “what does this abbreviation mean” before posting, the answers she’ll get there will probably make it even more confusing. Also, for me personally, I’m not comfortable taking financial advice from people who are in worse shape than me. Most of the people who post there are in worse credit shape than I was at the time I was posting (I’ve never missed a bill in my life and have a score in the mid 700’s…why on earth would I take “advice” from people who routnely miss bills and have issues with Collection Agencies calling them and scores in the 500s?? Especially when they’re rude!)

I think the first issue your sister needs to look at is HOW did she end up with 50K in unsecured debt. This is the heart of the problem because she has to recognize how she got to where she is to be sure it never happens again. Was the 50K one or two emergencies? Or was it hundreds of little spending sprees on frivalous things? She needs to step back and recognize how this happened or I can almost guarantee you it will happen again.

 

[bsusanmb]

Do you mean consolidation in general or an agency called Consolidated?

She looked up CCCS (Apprisen), but they don't have branches anywhere near her. She lives in upstate NY, a village called Coxsackie, which is 30 minutes from Albany. Even the online service they offer doesn't list NY State. But they had a phone number to call where they would refer her to another agency.

I just hope it works out for her, and I hate to sound selfish, but her stress is becoming mine as well as she calls me every day in a panic. I'm leaving for WDW in 4 days and I feel guilty, but it's a birthday trip using the free ticket Disney gives to Birthdayers, my frequent flyer miles, and my Disney Rewards points to pay for two nights. If I were paying for it, I'd want to just give her the money and cancel my trip, but honestly it wouldn't even make a dent.

Thanks again. It's insane how many people are going through this, as I've learned doing research.

I did mine over the telephone with CCCS, Apprisen. I filed my information on line and then a lovely woman called me and went over everything. It saved me $46,000 in interest. My payments were nominal and I got out of debt.
I deal with an Ohio office and I live in PA. Suze Orman recommends this agency and that's how I got the information.

 

[bsusanmb]

Yes, you're right. However, I wouldn't pay anyone $25/mo to do something I could do for myself. Additionally, is that going to change her thoughts/behaviour?? By giving it all over to a 3rd party, you're not taking any responsibility for what you've done (racking up 50k in debt) and you're not getting your hands dirty cleaning up your own mess. You're just pushing it off to the side and learning nothing.... the chances of you racking up debt like this again are very good since you don't truly understand the consequences.

I am also of the "Give a man a fish, feed him for a day. TEACH a man to fish, feed him for a lifetime" school.

That $25 is worth every penny. I gave over ALL of my unsecured debt to them, they sent out letters or agreement, and once a month they took out a set amount of money and paid all of my bills for me. They only charge a client on their income. Some people pay nothing. The behavior stops immediately because you no longer have credit cards to rely on. You learn to purchase with cash only. It is like the world was lifted off my shoulders. By the time someone is $50,000 in debt, they realize the problem and there is no easy solution. I know that. The CC companies will tell you that you have to be behind a certain amount of time on your payments to get into a debt management plan...not true if you use CCCS. When I informed my creditors that I was using them, they commented that CCCS is one of the best organizations because they are not for profit. I don't think that anyone needs a lecture on how did you get there...once your money is controlled by someone other than you, you learn a hard lesson...you can't spend more than you earn.

 

[SarahKate]

Yes, you're right. However, I wouldn't pay anyone $25/mo to do something I could do for myself. Additionally, is that going to change her thoughts/behaviour?? By giving it all over to a 3rd party, you're not taking any responsibility for what you've done (racking up 50k in debt) and you're not getting your hands dirty cleaning up your own mess. You're just pushing it off to the side and learning nothing.... the chances of you racking up debt like this again are very good since you don't truly understand the consequences.

I am also of the "Give a man a fish, feed him for a day. TEACH a man to fish, feed him for a lifetime" school.

I guess I don't understand how going through an organization such as CCCS is NOT taking responsibility for what you have done. As previous posters have said, CCCS has a little more leverage with the CC companies. And I think by paying OFF the balance is definitely showing the person being responsible. NOT paying off the balance and just letting things slide, THAT is irresponsible. CCCS gives a lot more than just reducing your interest rates. They really do give you counseling on budgets, you have to agree to not use your credit cards while on the program, as well as classes that will help you in the future - saving money, buying a house, etc. That fee they charge per month is priceless. You send in ONE payment and they distribute it to the creditors. So that is money you're saving in writing in checks, stamps, envelopes and just the time. And then let's talk about the interest. $25 is a small price to pay, in my opinion. It also gives you the feeling that you are not in it alone - someone is keeping you accountable each month.

I personally used CCCS about 11 years ago. I had racked up some cc debt in my younger years. Was it irresponsible of me to go that route? I paid off every cent of the debt.

 

[Aisling]

She got into so much debt by constantly doing 0% balance transfers over a period of about 4 years, and then never was able to pay it off before the end of the 0% agreement, thus a tremendous increase in interest/finance charges, which ended up being higher than what she originally had before the 0%!

The bottom line on how she got into debt in the first place, she charged charged charged everything for rewards points (not Disney)! What a waste, but she learned her lesson but good.

Anyway, thank you for the Albany office of CCCS.

She's fairly young (34) with a good job, homeowner, but no savings. She has vowed to change her financial life, and I believe she means it. This whole thing has scared the crap out of her.

Thanks again, and I'll keep you updated.

 

[bsusanmb]

I guess I don't understand how going through an organization such as CCCS is NOT taking responsibility for what you have done. As previous posters have said, CCCS has a little more leverage with the CC companies. And I think by paying OFF the balance is definitely showing the person being responsible. NOT paying off the balance and just letting things slide, THAT is irresponsible. CCCS gives a lot more than just reducing your interest rates. They really do give you counseling on budgets, you have to agree to not use your credit cards while on the program, as well as classes that will help you in the future - saving money, buying a house, etc. That fee they charge per month is priceless. You send in ONE payment and they distribute it to the creditors. So that is money you're saving in writing in checks, stamps, envelopes and just the time. And then let's talk about the interest. $25 is a small price to pay, in my opinion. It also gives you the feeling that you are not in it alone - someone is keeping you accountable each month.

I personally used CCCS about 11 years ago. I had racked up some cc debt in my younger years. Was it irresponsible of me to go that route? I paid off every cent of the debt.

Amen! It is easy to criticize if you have never been in this situation...to me it is like any other addiction...and once you recognize that you can't do it alone and you need to STOP because you have hit rock bottom, there is someone to hold you accountable. They no longer tell you that you can't change anything. Of course you can't charge on the cards they are paying off as you are in a debt management program and the cc company has lowered the interest rate to aid in paying off the debt. I kept one low interest, low limit card for travel. You need one. It is the best thing I ever did. My problem was not being able to say NO to anyone. And it got out of hand. Never again. Best wishes to you and your friend. Hope it all works out.