Here are the basic steps to prepare for credit counseling:
- Make the initial contact
- Prepare a draft of your current household budget
- Gather together:
- payroll stubs (last one for each income source)
- Last 2 years of tax returns
- Copy of last received billing statements on all debts, utilities, mortgage, car payment, etc.
- Prepare a list of your assets with an estimate of current market value
- First consultation (by phone or in person)
Don’t be like Jerry and get frustrated because you didn’t have your papers ready:
I called a debt consolidation company that I had seen on television in hopes to make it easier to pay off my debt. I had to give them a lot of information about all the debt I had accrued.It was not really easy for me to find all the information they wanted and they were not very helpful. It took me about a week to find any paper work I had then I had to contact them again, but when I contacted them the second time they had no idea who I was and all the information they took the first time they had to take again.
Basically, what they did was take all my debt, add it up, and divided into twelve monthly payments. My monthly payment ended up being so high I couldn’t afford it. In the end, it really didn’t help me to contact them. They didn’t do anything for me that I couldn’t have done myself.
And, you need to know a reputable credit repair agency will give you up to 5 years to pay off your debts. If the monthly payment is too much to handle, talk to your counselor about getting it lowered.
During your first consultation you may be told whether or not you qualify for their services (yes, you do have to qualify). However, if the counselor needs to do a deeper review of your financial situation after the first consultation, it could take longer to notify you.
Qualifying for The Debt Management Program is usually pretty straightforward:
- you may have to meet a qualified unsecured debt minimum;
- you must place all qualified unsecured debt into the program; and
- all parties must be able to maintain reasonable payment expectations, including how long it will take to pay off your debts and your monthly payment amount.
After your first consultation, the debt consolidation service may obtain a copy of your credit report, contact creditors, prepare a list of recommendations, and draft the Debt Management Agreement (DMA) outlining what they will do, what you need to pay, etc.
At this point, you will likely have another consultation, again free, either by phone or in person. You will receive a copy of the proposed DMA to review, and accept, if you decide to use their services.
Making Payments For Credit Counseling
If you enter into a Debt Management Agreement with CCCS, you will be making monthly payments directly to them. They will deposit your payment in their escrow account, then issue checks to your creditors in accordance with the DMA each month.
Deena wasn’t sure what to do; and turned to her mother for advice:
When my mother informed me that she was working with a debt consolidation company, I had a lot of questions regarding the program that she joined.When I was younger, I was very irresponsible with my funds and took to using credit whenever possible. I found myself paying multiple monthly payments that seemed to only cover interest. That’s when I decided to join a debt consolidation program.
They presented all of my options that would decrease my payments and cut the interest down significantly. Now I make payments bi-monthly and my credit is slowly, but surely, improving with every payment.
In most instances, you can make weekly instead of monthly payments if it fits into your budget better. The only restriction is you need to make sure the total minimum monthly payment is paid on time.
Click here to read more about Credit Counseling.