Finally, we have to ask you the obvious. Have you tried to cut your expenses? Why not track your spending for a few months, then see what you can eliminate. This is probably the quickest avenue to debt reduction.
Choosing a Debt Counselor
Finding a good credit-counseling program can be a bit tricky. After all, it’s not something you’d want to bring up with colleagues around the company water cooler. That means you’ll have to do the legwork on your own. But there are a few things to keep in mind to make the task easier and less fraught with disappointment.
First, look for a nonprofit firm. You’ve spent too much already, why pay more now? Nonprofits get most of their funding from creditors, not you. Privacy isn’t usually an issue, but it’s wise to check what the agency’s policy is. Make sure they don’t sell your information. Also, check the enrollment and monthly fees. According to the Association of Independent Consumer Credit Counseling Agencies (AICCCA), many ask for only a nominal fee to enroll, capped at $75, and a monthly fee of up to $50. In the past, a few unscrupulous agencies were known to charge the full amount of your monthly debt payment, plus an additional 10% each month, according to the AICCCA. Neither the AICCCA nor NFCC groups charge the latter. Such excessive charges have been largely wiped out by IRS regulations and updated state laws.
Second, find out upfront exactly what services you’ll receive, such as counseling, a debt-repayment plan and budgeting advice. The more services, the better. You might want to have them put it all in writing and send you the information before you proceed.
And ask if the organization belongs to any professional groups, such as the NFCC or the Better Business Bureau. Have them explain how they’re audited and if your funds are protected. After all, you’re sending them your money.