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Digging Out of Debt
Credit counseling can help restore your financial freedom
BRYAN LEISTER
Many Americans are
sinking deeper into
debt. Some even use
credit cards to buy
necessities like food or
to pay monthly utility bills. If this
sounds familiar, it’s probably time to
get help from a good credit counselor.
But not all the country’s more than
1,000 credit and debt management
services are alike. To separate the good
from the not so good, make sure counselors
are asking the right questions.
Focus on Education
Good counselors help you learn to
manage your money. They should first
find out why your finances got out of
control, then help you get organized so
you don’t slip back into trouble. They
might help devise a budget, identify
areas where you can save money and
work with creditors to lower interest
rates and set up a payment plan.
“Not only will we help you get out
of debt,” explains Candy Lamb, a certified
credit counselor at GreenPath
Debt Solutions in Detroit, “we’ll help
you prevent it from happening again. ”
Credit Counseling Caveats
Here are some things to watch out for
when shopping for a credit counselor.
Debt Consolidation. Beware of counselors
who skimp on getting to the root of
your problem and instead pressure you
to sign up for a program that pools
your debts and makes payments to
your creditors — for a hefty fee.
“If the first thing an organization
does is try to offer you a debt consolidation
plan, then they probably
don’t have your best
interests in mind,” says
Mike Hall, president and
CEO of Take Charge America,
a Phoenix-based credit
counseling service.
Instead, a good agency
offers debt consolidation as
just one of their services.
Often, once you enter a
program, you surrender your credit
cards and pledge not to seek additional
credit while paying off debt. You
also make monthly payments to your
credit organization, which in turn pays
off the balances due to your creditors.
Warning Signs
of Financial Trouble
• You have little or no savings
• You aren’t putting money in a
retirement account
• You receive regular utility
shut-off notices
• Your credit card balances increase
every month
• Your credit cards are maxed out
• You’ve recently been denied credit
Link to Learn
www.consumerfed.org
Consumer Federation of America:
Click on the finance page for information
on credit and credit counseling.
www.nfcc.org
National Foundation for Credit
Counseling: Use this site to locate
NFCC member agencies and advice.
Cash Flow. A good consumer credit
service will tell you it charges a small
fee to help you manage your money
and pay off your creditors. Asking for
a sizable up-front fee to set up an
account would be a red flag. Although
funding for agencies also comes from
the credit card issuers themselves, there
should be no official affiliation.
Once you find a counselor you’re
comfortable with, you can work
together to build a financially sound
future. Most people stay in a program
for two to four years and end up with
a rebuilt credit rating, freedom from
crushing debt and the confidence that
they (not credit card companies) are in
control of their financial destiny. ■
— Chris Anderson
www.takecharge.org
Take Charge America: Check this
agency’s “What We Do” page for a
benchmark of counseling services.
www.greenpath.com
GreenPath Debt Solutions: This site
offers resources and links on credit
and money management.
TOMORROW FALL 2003 25