If it’s time to get your finances under control, you may want to consider the services of a credit counseling organization. Most reputable credit counselors are non-profit and offer services at local offices, online, or on the phone.
Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate non-profit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
A reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If a firm doesn’t do that, consider it a red flag and go elsewhere for help.
Once you’ve got a list of counseling agencies check them out with your state Attorney General and local consumer protection agency. They can tell you if consumers have filed complaints about any one of them. BUT if there are no complaints about them, don’t consider it a guarantee that they’re legitimate.
After you’ve done your background investigation, you will want to interview several credit counseling agencies. Look for an organization that offers a range of services, including budget counseling, and savings and debt management classes. Avoid organizations that push a debt management plan (you pay them and they pay your creditors) as your only option before they spend a significant amount of time analyzing your financial situation.
Find out about their fees—either an initial or monthly fee and get a specific price quote in writing. Do a thorough review of any agreement or contract and never sign anything without reading it first and having a complete understanding of the terms and conditions.
Check out their qualifications to be sure they are licensed in your state and see if they are accredited or certified by an outside organization and be sure to check out the certifying organization. Try to use an organization whose counselors are trained by a non-affiliated party.
Ask about confidentiality. What assurance do you have that your personal information (including address, phone number, and financial information) will be kept confidential and secure?
Find out how the employees are paid. If employees are compensated by selling you certain services, or if you agree to pay a fee, or if you make a contribution to the organization, consider it a red flag and go elsewhere for help.
Beware of any organization that tells you it can remove accurate negative information from your credit report. Legally, it can’t be done. Accurate negative information may stay on your credit report for up to seven years. And if they are making you pay for removing inaccurate information, you can do that yourself free of charge.
If you do decide to work with a credit counseling service, continue to pay your bills until your creditors have approved the plan. If you stop making payments before your creditors have accepted you into a plan, you’ll face late fees, penalties, and negative entries on your credit report. Contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the credit counseling organization for your debt management plan.
Make sure the organization’s payment schedule allows your debts to be paid before they are due each month, since paying on time will help you avoid late fees and penalties. Review the monthly statements from your creditors to make sure they received and correctly applied your payments.
If your debt management plan depends on your creditors agreeing to lower interest rates or eliminating finance charges, or waiving late fees, make sure these concessions are reflected on your statements.
The best advice we can give you is to stay on top of your finances on a regular basis and don’t let your spending habits and debt overwhelm you.
If you have any inkling that your finances are headed for disaster, address the problems as soon as you see them coming. The longer you wait to get your finances under control the more of a mess you’ll have to clean up. These problems don’t happen overnight—they creep up gradually. If you are in a situation where your finances feel slightly out of control, the best thing you can do is get them under control before they get unmanageable.
If you are experiencing overwhelming financial challenges, you’re not alone. Consumer debt is at an all-time high. Whether your debt is the result of an illness, unemployment, or simply overspending, it can seem impossible to manage.
Although it may seem counter intuitive, one of the most important things you can do in tackling a financial problem is to pray. If you are married both of you should pray together on a regular basis for the strength and wisdom to be good stewards of the blessings God has given to you.
It IS possible to dig your way out of a financial disaster. We know—we did it!
The Compass Catholic podcast has more ways to be proactive about avoiding a financial disaster.