Okay, I’ve heard all of the horror stories about disreputable credit counseling services, etc. can anyone recommend a good one? Preferably a national company? We’re located in Arkansas, and really need to get a handle on our debt, which runs the gamut from credit cards to medical bills.
Any way to verfiy that they’re not ripoff artists? I’m hesitent to trust the ‘testimonials’ from their site.
Any help from Dopers who’ve gone through it would be welcome.
I don’t know anything about the site you posted, but I used Consumer Credit Counseling Services. I managed to get myself in so deep that the debts exceeded my annual salary. I’ve been slogging along for a few years and will be debt free August 14, 2008. The national website for the National Foundation for Credit Counseling has lots of good advice on choosing a credit couseling agency, and lists member agencies on a separate site, Debt Advice . From what I’ve read, the reporting agencies no longer hold going through credit counseling against you, so when you emerge from counseling, your debts show as paid in full, but not how they were paid. Any delinquencies from before entering counseling show up, but will fall off your report in time. Good luck!
I use Advantage Credit Counseling services. They’re located in Pennsylvania and I live in Ohio, but we did everything by phone. I’ve been with them over a year, and so far, everything seems to be going well.
I’d recommend asking around. I know some people have huge issues with credit counseling, but I think if you find a good agency, it can be a good, good thing - I was drowning in debt, and now I’m getting a handle on it.
I worked for two years in a non-profit consumer credit counseling organization of excellent quality. I took the job after they did such a great job helping me with my troubles. In fact, they were consistently rated among the best in the country, and constituted some of the nicest people I have ever known. It is one of the most efficient and competent places I’ve ever worked for as well. They respect the input of all of their employees, even those on the lowest rung of the ladder, and there is complete transparency about agency actions. As a result, you will find the people working there are very, very happy and nice.
The focus is on achieving self-sufficiency and they will not recommend debt consolidation if it is against your best interests. They will instead present you with all of your options and put the power in your hands. They have nothing but compassion and understanding for the real pain and anxiety people feel when they go through this.
The only drawback is they don’t have branch offices in every state, though phone counseling is an option as well.
When I worked there, I wasn’t comfortable advertising for them, but now that I’m an ex-employee, what the hell. It’s GreenPath, and it’s the best you can get.
Basically any organization you go with should be approved by the National Foundation for Credit Counseling that the Blue-Sighted Shadow linked to above (cool username, btw.) You should also check it out at the Better Business Bureau.
You have to remember that debt consolidation really only works if you have something to protect. On a scale of 1 - 10 if bankruptcy is the worst at ten, then debt consolidation is a nine. Not much better if any.
So your credit will still be shot and you’ll wind up paying off bills a chapter 7 could’ve wiped out. Then again if you have a home etc, you will have to take other steps to protect it.
Common issues with debt consolidation include the company not paying your bill though you pay them. Thus leaving you behind and still owing money. Debt consolidators taking on cases where a chapter 7 is a better answer. And debt consolidators trying to help you with things like student loans, child support back payments and the like which are governed under a seperate set of laws
We need to make a distinction here between ‘‘debt consolidation’’ and ‘‘debt management.’’ My former organization doesn’t do consolidation (in which you are charged a fee for an agency to pay your debt and then you owe the agency the balance rather than owe the creditors.) It does debt management, which means you pay it regularly to distribute payments to your creditors on your behalf, and the agency in return works out a contract with the debtor to repay at a lower interest rate. In some cases past due accounts can be brought to a current status just by contracting through a debt management organization. The maximum fee at my organization was $50/month, but considering usually the client’s debt payments were cut in half, people generally do not mind paying us $50 to save them hundreds.
There are a number of predatory consolidation agencies, but managing debt with a reputable agency does not mean your credit is shot. In fact, if you are up to date on your current bills, then a DMP (debt management plan) should only affect your credit score insofar as you will have to close those accounts. You should not have any delinquent payments on your record. It is not ‘‘as bad as bankruptcy’’–not even close.
The only place where it gets tricky is if you have accounts in collection. A lot of debt collectors won’t work with debt counseling agencies, but sometimes we were able to get the debts recalled from the collector back to the original creditor. Sometimes collectors sue. Sometimes they refuse to sign a formal contract and yet accept our payment for years. Sometimes they accept our payments for years and then sue. When they do that, however, our agency would just draft a letter for the client stating that we’d been making consistent payments toward that debt on the client’s behalf and the client would show up in court with our extensive documentation of trying to make good on the debt. 99.9% of the time the client will get a judgment ordering the client to continue paying in small installments through us.
If you’ve got debts in collection, though, your credit is already fucked. It’s best to come to the agency before you fall behind on your bills to really get the full benefit.
In cases where Bankruptcy is better, clients are told flat-out that Bankruptcy is better. We did NOT under ANY circumstances recommend debt management when it was not the best option for the long-term financial health of the client.
Stonebow I am willing to answer any of your general questions about how these organizations function–I used to manage hundreds of these accounts, work directly with the creditors, handle the contracting, etc. I am not qualified to make recommendations based on your individual financial situation. Keep in mind these answers are based on the situation in 2007.