When Should You Consider Credit Counseling & What Should You Expect

If you are able to pay your bills, and you are current on all your accounts using the income you make every month, you probably do not need credit counseling. Here are some signs that you should start contacting credit card counseling services sooner rather than later.

If you:

• Can't pay your credit card bills
• Can only make payments by covering household costs on your credit cards
• Are consistently paying one or more bills late, incurring fees and penalties.
• Wish you could negotiate a better interest rate.
• Foresee that your payments will soon become unsustainable due to a change in your mortgage interest rate, illness or an anticipated lapse in employment.
  

If these things are true, then you should start contacing services who can help you manage your debt. They can work with you to see which of many solutions will work best for you and your creditors.

Note that as you research counseling services, you should make sure the following is true.

• You should not have to pay big upfront fees
• The service you work with should be accredited by the National Foundation for Credit Counseling or Association of Independent Consumer Credit Counseling Agencies
• Every payment you make to a credit counseling firm should result in payments being made to your credit cards. Some credit counseling services take your money and do not pay your debts.

Credit counseling may have some effect on your credit, or it may have none at all. Some lenders may not want to do business with you after you've completed your plan, but others will. Contrast that with a bankruptcy, which is viewed by almost all mainstream lenders as a huge negative on your credit report. These lenders, who prefer to deal with consumers with good credit, typically won't do business with you for the 10 years the bankruptcy remains on your file.

Credit Card Company Lies & Misconceptions

Need help dealing with credit card companies. You are not alone. Frankly, there are so many misconceptions about credit cards and collections that most people need help to deal with them. One reason we so strongly recommend national credit counseling services is that they can tell you what is legal and what is not. Still, everyone should understand the basics.

First, credit card companies lie, or rather their operatives do, when you talk to them on the phone. When they say "this call may be recorded" they mean that it will be recorded. So everything you say to someone on the phone is recorded and that data can be used against you. Note that you cannot use that data against them because its their recording. If you talk to a credit card company on the phone, and the operators promises you something, that may or may not be enforceable later. Most of us have had someone working for a credit card company promise us that they would remove a late payment or delete a charge only to find out later they did not follow through and there is no record of the conversation. What this means is, don't talk to them on the phone. Operators who talk to you on the phone are being recorded and they will lose their jobs if they deviate from company policy, and company policy is not designed to help and protect you. It is designed to help and protect the company.

Second, operators on the other end of the phone are in no position to negotiate with you. The things they can offer you are very, very limited. So if you have a big problem, talking to someone you can reach by phone won't work. They can't say "Yes" to things like a lower interest rate or a removing a charge for a missed payment. These days, even "supervisors" you can reach by phone can't help you. So don't try to negotiate with credit card representatives over the phone. You will only become frustrated. They literally can't give you what you want.

Third, credit card companies are not obligated to tell you your rights. They are not obligated to inform you that credit card debt is unsecured and they can't go after your home directly. Credit card collection folks are not obligated to tell you that they can't call you at work or that you can tell them to stop calling altogether. Collection companies who have purchased your debt do not have to tell you that you may not be required to pay their fees and additional charges. They will not reveal that they could (if they wanted) cut your debt to a less than a third of what you owe.

It is important to understand that the operators are on the other end of the phone are just working folks like you and I. They don't mean to be bad people, they probably know less than you just learned about credit card debt. They are just doing their job.

Nevertheless, to protect your rights you need to work with experts who negotiate with credit card companies daily, and the more people they represent the better.

Credit Cards and Bankruptcy - What You Need to Know

Credit card problems so bad you're considering filing for bankruptcy? Stop. Bankruptcy is not the only option and it is usually not the best one. You may think that it will prevent foreclosure. You may believe that it will protect your house. But the truth is that credit counseling is the step you should take before you consider bankruptcy.

Why?

Credit card companies earn that outrageous debt because it is "unsecured credit". That means that a credit card company cannot take away your home. They can go before a judge and get a judgement, and the judge in that case may (in very, very rare circumstances) decide that your house must be sold to pay some portion of the bad debt, but filing for bankruptcy puts you directly in to the hands of a judge. The worst case scenario is expedited if you file for bankruptcy.

Credit counseling by one of the many nationwide services representing millions of customers can do the following:

• Reduce the amount you actually owe credit card companies. Counseling services can eliminate 30%-70% of the amount you owe away.
• Counseling services can negotiate your interest rates down to manageable rates. If you are paying 19%-30%, imagine how much easier it would be if your credit cards were only growing at 7% per year, and the principle was 1/3 of what you orginally owed.

So your first step in resolving your credit card problems, protecting your family and saving your home, is contacting several credit counseling services and asking them to specify exactly how they can help you.

Credit Card Counseling - Rules You Must Live By

If you are having trouble with banks and credit card companies over late payments or defaults, there are some very important rules you must live by. Failure to live by these rules can result in bankruptcy, foreclosure and legal judgements. These rules are simple and straight-forward.

First, if you are unable to pay your credit card bills do not contact your credit card companies directly. You are in no position to negotiate with these businesses. They have legal departments that can file suit against you, they can ruin your credit rating, they can sell your account to another company leading to years of harassing phone calls, and ultimately you have no way to hold them accountable. A credit card counseling service can hold credit card companies accountable. They know your rights, what is legal and what is not, and they represent millions.

Second, do not ever contact your credit card company by phone. Contact them only in writing and respond only in writing. If they call you, tell them they are calling on a business number and hang up.

Third, the first thing you must ask of any new creditor is that they mail you proof that you are responsible to THEM for the debt. You will provide this information to your credit card service. It is not the case that because your debt is sold to a company that you are automatically obligated to meet that company's terms and conditions or to pay their additional fees.

Fourth, if you have credit card debts that are more than a year old, do not pay them. State and federal laws say that debts must be forgiven if you have not paid them for varying lengths of time. Paying them restarts the clock.

You are not obligated to answer anyone's questions on the phone or to put up with harassment at work. Working with a credit card counseling service will help insure your rights are protected.

Credit Card Trouble? You Are Not Alone!

There is a trillion dollar bomb in American wallets, and a growing number of people are enrolling in credit counseling services in order to try and defuse their part of it. The sooner you act, the more you save. Do not allow unsecured credit card debt to jeopardize your home or family. Good credit is important, but using your money to pay your most important expenses first each month is more important.

There are some key things you should have in hand before contacting a credit card mediation service.

• Have a list of all your credit cards, including phone numbers, interest rates and account balances.
• Be able to tell the service whether your accounts are paid up to date, or how far they may be in arrears.
• Have a list of all your other monthly expenses, ranging from rent and mortgage to food and child care.
• Be able to provide contact information for your employer in case they need to verify income.

It is important to contact several credit counseling services.

Each offers different terms and each has a different strategy for solving credit problems. After you find a couple of services you like, you can do a little research online to confirm they are legitimate businesses. Some of best services work with consumers nationwide which gives them a great deal of leverage in negotiating and enforcing credit terms.