Living paycheck to paycheck? Worried about debt collectors? Can’t seem to develop a workable budget, let alone save money for retirement? If this sounds familiar, you may want to consider the services of free consumer credit counseling.
Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But beware — just because an organization says it is “nonprofit” doesn’t guarantee that its services are free or affordable or that its services are legitimate. In fact, some credit counseling organizations charge high fees, some of which may be hidden, or urge consumers to make “voluntary” contributions that cause them to fall deeper into debt.
Free consumer credit counseling provide credit counseling through local offices, the Internet, or on the telephone. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Choosing a Credit Counseling Organization
Reputable credit counseling organizations offer free consumer credit counseling and advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops.
Their counselors are trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts 15 minutes by phone, with an offer of in person follow-up sessions.
A free consumer credit counseling service will want to know more about your situation over-the-phone first, and if able to help provide a local office to visit or refer you to other appropriate services such as: legal assistance, bankruptcy counseling classes, housing assistance and many other non profit or charitable organizations.
Debt Management Plans
If your financial problems stem from too much debt or your inability to repay your debts, a free consumer credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone.
Consider signing on for one of these plans only after a credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still will help you create a budget and teach you money management skills.
If a debt management plan is not within your budget then you may want to consider a debt settlement plan implemented by a debt settlement attorney. Debt settlement is the only way to reduce the balance you owe, thus substantially reducing your monthly payments sometimes by as much as 60%.
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