OT - Need recommendation for credit counseling agency

  1. You have chosen to ignore posts from 1stTimeMom90709. Show 1stTimeMom90709's posts

    OT - Need recommendation for credit counseling agency

    I don't post here very often but I frequently lurk and I was hoping I may be able to get a few suggestions. I tried to search the archived discussions on this page and the personal finance page but didn't have any luck.  A friend of mine has some credit card debt (only one credit card) and has been contacted by a debt collection agency.  I really have no idea how to deal with a situation like this but I did some research and it appears the way to go is a non-profit credit counseling agency.

    So has anyone had experience or know of someone who has experience with a credit counseling agency that they can recommend (or ones to stay away from)?  Or if anyone has any suggestions about another way to handle this debt issue that may be better, I'll take any recommendations I can pass along.

    Thanks so much in advance!

     
  2. You have chosen to ignore posts from ml2620-2. Show ml2620-2's posts

    Re: OT - Need recommendation for credit counseling agency

    I can't recommend an agency, but if it's just one card I'd avoid credit counseling, it will completely destroy her credit for years.

    She should call the credit card company and work out a payment plan. She should also cut up the card and not try and use it anymore!
     
  3. You have chosen to ignore posts from itsallnew. Show itsallnew's posts

    Re: OT - Need recommendation for credit counseling agency

    I agree with ML- credit counseling agencies are notorious for not really helping with credit card debt.  I don't have any suggestions, but if your friend can find a non-profit or consumer help group that does things like financial planning and debt management seminars, that would be a good route to go.  These are usually free and are help by organizations that deal with this kind of stuff.  From there, she can possibly talk to a counselor one-on-one.  Calling the credit card company is also an option, but be careful of reaching an agreement to lower the debt in full because that can also wreak havoc on your credit score.  HTH!
     
  4. You have chosen to ignore posts from SilverFestiva. Show SilverFestiva's posts

    Re: OT - Need recommendation for credit counseling agency

    Not true! I enrolled myself into debt counseling almost 3 years ago and I am 2 years away from being debt free and I have excellent credit! I took an initial hit, but now my score is like 790. I have bought a house, 2 cars in this time.

    The bad guys are the Debt SETTLEMENT companies. I use DCC: http://www.debtcounselingcorp.org/

    they are great. You send one payment per month and they disburse it to your creditors. They do not pay off your credit with a loan - you can still access your same bills and see that the payments are being made. And at any time you can increase your payments.
     
  5. You have chosen to ignore posts from ALF72. Show ALF72's posts

    Re: OT - Need recommendation for credit counseling agency

    it's one card. The last thing your friend needs is to sign on w/ an agency to 'assist' her.  She should call the company back and set up a payment plan. if she wants to pursue counseling for finances on her own, great, but that's a separate issue.

    Most importantly, let your friend figure this out on her own. She is a big girl, supposedly, b/c she has her own credit card, and should figure out her own mess herself. Nothing gets uglier faster than getting involved in someone else's finances. 
     
  6. You have chosen to ignore posts from luckinlife. Show luckinlife's posts

    Re: OT - Need recommendation for credit counseling agency

    One thing I would add - she should call and try and negotiate the interest rate and the pay back amount.  I do agree that with one card I would not use anyone additional for help.
     
  7. You have chosen to ignore posts from kargiver. Show kargiver's posts

    Re: OT - Need recommendation for credit counseling agency

    I agree with ALF.  If one card is the problem, there's no reason in the world to call a credit counseling company.  If a credit card company is faced with earning no profit on her balance or not being paid back at all, they'll pick reducing the interest rate to as low as 0% every time.  The friend needs to insist that if they aren't willing to negotiate she'll have to default.  They'll negotiate.

    However, fyi, my ex-husband ran us into the ground (1997-8?), and we ended up calling Credit Counselors of America.  They DID help.  We got out of debt on their plan, and it was much like the ads - the stress was lifted, our credit remained good, and we got out of debt.  We were under a lot more than one card of damage, though.
     
  8. You have chosen to ignore posts from 1stTimeMom90709. Show 1stTimeMom90709's posts

    Re: OT - Need recommendation for credit counseling agency

    Thank you all so much for your responses and advice!  I tell  her to just call the company and also give her the two recommended agencies in case it's a bigger problem then my friend is letting on.

    Thank you again!!
     
  9. You have chosen to ignore posts from lemonmelon. Show lemonmelon's posts

    Re: OT - Need recommendation for credit counseling agency

    If she's been contacted by a collection agency she may not be able to negotiate much. The credit card company may have sold her debt to this company, and they now control it. The involvement of a collection agency indicates that she has missed or been late for several payments, or that she's seriously over her credit limit, or all of the above. It's not just a matter of carrying a debt at that point -- all of these things have serious, long-term impact on one's credit score. A simple late payment can stay on your credit report and impact your score for up to seven years (so if you ever make a late payment, call the company immediately and ask them to waive the fee and not report it -- they will usually agree).

    If your friend has a large debt (the fact that it's one card doesn't mean much -- I could probably put a dormer on our house with the ridiculously high limit on my card), high interest, and has accrued late fees and penalties, it's unlikely she'll be able to dig herself out without assistance of some kind. For one thing, she probably lacks the financial skills to extricate herself. For another thing, it's not really in the credit card company's interest for her to be debt-free. They would prefer to keep her paying and accruing more debt.

    I don't know much about the new laws governing credit company behavior, so this information might no longer be applicable, but in the old system at least, if a person failed to make a minimum payment one month, she would need to pay double the next, plus fees, or each month would show a missed payment, and the fees would continue to build. And, of course, the interest rates go up at the same time. So one could easily find oneself in a situation where one is paying an exorbitant sum each month while accruing more debt. Once you get into such a deep hole it is very difficult to get out again without assistance.

    Collection agencies will offer you a buyout at a reduced amount -- and if you happen to have that amount handy you should talk them down as far as possible and pay it off after receiving written confirmation that they will contact the credit agencies (and written confirmation for your own records that your debt has been discharged -- my husband keeps getting billed for his first cell phone, which he paid off at the time and then twice more before I stepped in, paid it a third and last time, and forced the stupid collection agency to send a notarized letter of discharge. Duh. We have to dig it out every few months! These people are ANIMALS.). But if you've dug yourself that deep into the hole, you probably don't have any money to pay off, the debt, because if you had it you wouldn't be in debt, right?

    I don't think there are many worse feelings in the world than being crushed under credit card debt and not knowing how to get out. Collection agencies call your work, they call your family. It's shameful and awful. So do support your friend through this, but, like Alf said, don't get more involved than you have to. Because it's messy and embarrassing and your friend will feel judged by you -- she's already lying to you about the severity of the situation. But more importantly, your friend needs to learn to control her own finances -- this is a life skill that should be taught in school -- and once she takes charge and starts reducing her debt she will feel empowered. A truly effective debt management plan will involve a total lifestyle change, and when she sees her debt start to decrease it will give her intense pleasure, in the same way that blowing money used to. And when she digs herself out and starts saving, that pleasure will be even greater and more satisfying.

    Michelle Singletary, whom I LOVE, links to this credit counseling agency: http://www.debtadvice.org/. She also suggests Debtors Anonymous: http://www.debtorsanonymous.org/. I don't know about either. However, if your friend is a resident of Boston, the city offers an excellent, free Credit Smart program, which I took to prepare myself for buying a home: http://www.cityofboston.gov/dnd/bhc/credit_smart.asp. Other cities or towns may offer similar programs.

    I wish your friend the best of luck.
     
  10. You have chosen to ignore posts from poppy609. Show poppy609's posts

    Re: OT - Need recommendation for credit counseling agency

    I agree that basic money management skills should be taught somewhere along the lines in school.  And not just the token, "let's balance a pretend checkbook of a pretend person in my fourth grade math book because we are studying decimals."  Parents cannot always be counted on to teach their kids how to effectively manage money (mine didn't, and I worry about how to correctly teach my own DD).

    Good luck to your friend - Lemon's right, there are few things that feel worse than being in over your head with debt.
     

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