Take Charge of Your Credit Card Debt
If holiday bills threaten to be the straw the breaks your budget's back, you don't have to face the problem on your own. There are several options open to you including credit counseling and debt management programs offered by American Debt Counseling and other non-profit organizations. In 2009 alone, American Debt Counseling helped clients pay off more than $37 million in credit card debt. Below is an overview provided by the Federal Trade Commission:
Credit Counseling
Nonprofit credit counseling organizations work with you to solve your financial problems with services offered through local offices, online and over the telephone. Reputable credit counseling organizations offer confidential and free advice about managing your money and debts. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting, and can discuss your entire financial situation with you. They will help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Debt Management Programs
You may qualify for a debt management program (DMP) in which you deposit money each month with a credit counseling organization who then uses those deposits to pay your credit card bills and other unsecured debts according to a payment schedule they’ve worked out with you and your creditors. Creditors often agree to lower interest rates or waive certain fees if you are repaying through such a plan.
If you are already in a DMP, the FTC lists three must do's:
- Make regular, timely payments.
- Always read your monthly statements promptly to make sure your creditors are getting paid according to your plan.
- Contact the organization responsible for your DMP if you will be unable to make a scheduled payment, or if you discover that creditors are not being paid.
The FTC also cautions that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP such as lower interest rates and fee waivers. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts “re-aged” again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have “late” marks and you will rack up late fees, which, in turn, will lead to more debt that could take longer to pay off.
