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Question:

Credit Counseling?

Hi, I am a college student struggling with about $5,000 credit card debt.. I know I know its not much but I was stupid and fell behind a few times in the past and my interest rates, late fees, overlimit etc have really added up. Has anyone here ever done "credit counseling", you know where they say they set uo one monthly payment, reduce interest, help get rid of past fees etc....What are the pros and cons and does it really help? Thanks for any advice.

Answers:

1) The counseling services are usually run by the credit card companies. They rather reduce your rate then have you default or file bankruptcy. If you were deeper in debt I'd say file but at 5g, your better off to find a way to pay it back.

2) you need to call the companies yourself first and see if they will work with you to reduce the interest rate... you may need to talk to a few people to get a manager on the phone who could do that for you.... just try for each company and see if they will waive a fee or two and let them know that you are extremely adament about paying this debt off... if you do go to a credit counseling service... go to the free ones... the ones that expect money to improve credit are usually just scams... try consumer credit counseling... free and non profit.. good luck

3) The good news is that a legitimate credit counseling service does work as advertised. They ask for all of your outstanding balances and work out repayment deals that are much easier to manage in one payment. You couldn't negotiate many of these agreements yourself, since you don't have the same relationship with credit card companies these people do. The bad news is that once you enter into the deal, you may have to surrender most of your credit cards and agree not to add any more purchases to the balances. You'll be paying down on frozen accounts, essentially. I've known people who have opened other credit accounts while paying off debts through credit counseling, but it's a tricky business. It shouldn't affect your ability to rent an apartment or turn on utilities, but credit counseling can affect your credit rating just like bankruptcy or collections. I'd say at your age and debt level, it may be better to stay away from credit counselors and find other ways to pay down the balance. You might be able to take out a bank loan with better repayment terms, for instance. Once you pay down the balance, you'll only have to deal with the bank. I'd save the major credit counseling plans if you find yourself with a number of accounts and you can only make minimal payments on any of them. Since you're still in college, you're not earning the sort of salary that would support a $5,000 debt. Wait until you graduate and start making REAL adult money before you do anything too drastic.

4) The only worry is to make sure they are legitimate. I have used them, they work with your creditor and work out a monthly schedule for you. You send the money to them and they pay for you. If you follow what they say, in a few years your credit is back where it needs to be. Take care of this ASAP. Bad credit can effect your employment opportunity.

5) I haven't, but I would. You have a small amout of debt, but counselling now would set up up for a very good future. You could learn how to manage your money while your still on the good side of it. Knowledge never hurt anybody.

6) you can cll the credit card copany yourself just tell them what you can do and usually with a little perswasion you will win what it comes down to is all they want is there money you just have to let them know how you can and will pay them but you may have to go higher than the operator response that you talk to firsy usually it takes a ok from a higher up

7) You can do as well as any credit counselor and without the risk of getting hooked into a bad counseling service. Call and talk to your credit card companies, negotiate a settlement agreement. The good card companies will knock off fees and, sometimes interest, in order to get things back in control. That means that $5000 does not keep climbing while you are trying to pay it back. Suggest to them you are considering bankruptcy as an option. Use this as a bargaining tool. In chapter 7 bankruptcy they will not get a penny. A few card companies I've dealt with are hard to deal with but most are surprisingly easy. Go to your college book store and obtain a copy of "Guaranteed Credit" by Arnold S. Goldstein. Sample letters for creditor settlements are in this book as well as good information about credit building.

8) if its just the one credit card sometimes the companies have a "work out" dept. where they will work out a lower intrest rate and negotiate for lower payments. I have used debt free, but the do charge a monthly fee, however I was able to pay off all my debt in 2 years vs 20. and then i never never want a credit cart again. nasty things. For tips on establishing or rebuilding your credit sans plasitc look here: "why student dont need credit cards" and tells you steps you can take to build credit. http://seattlepi.nwsource.com/money/1372...

9) Cut up the cards now. I think $5000 is an amount that can be handled with the creditor internally. Credit Counseling does work, but you have to pay things on time. It does not always save you money, but it can lower your interest and set up a time table for you.

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