Credit Counseling - Frequently Asked Questions

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The questions below are the ones frequently asked about Consumer Credit Counseling Services, counseling sessions, Debt Management Plans, and how the general process works.

What is Consumer Credit Counseling?

Consumer Credit Counseling is provided by nonprofit organizations called Consumer Credit Counseling Services (CCCS) that are created to help people solve their debt problems. The organization employ credit counselors that are experienced in helping create financial plans, budgets, and they contact your creditors to negotiate lower interest rates and lower payments to help you get out of debt faster.

How do know that I need help from CCCS?

What is the minimum amount of debt that I must have?

There is no minimum amount of debt required to engage a credit counseling service. Whether you owe $4000 or $40,000, you can still benefit from the services of a credit counselor. Credit counselor can have a positive impact on helping reduce the amount of outstanding debt that you have.

What happens during a counseling session?

During your personal session, a counselor will perform and analysis of your financial situation including income, debt, and expenses and then discuss possible resolution scenarios, and then make specific personalized recommendations for you to consider.

Will a counselor help me with budgeting?

Absolutely! A good counselor will help you craft a tough but realistic budget based on your actual current cash flows while taking into consideration living expenses and debt. The counselor will be available to work with you on long-term basis because their support comes from the creditors that they are helping you repay.

How much will this cost me?

Absolutely NOTHING! Consumer Credit Counseling is 100% FREE!! A significant amount of the funding for CCCS organizations comes from the creditors that you owe money to. It is in their best interest to fund the CCCS agencies that will help you and the bulk of their funding comes from the United Way.

Will my creditors continue to assess me finance charges?

See one of the greatest benefits of working with a Consumer Credit Counseling Service is that most if not all creditors will stop or significantly reduce the amount of fee or charges. The easiest thing that most creditors do is lower your interest rates after you make three consecutive payments on your account. The creditors want you to succeed which is why they lower your interest rate and payment amount.

Can CCCS stop creditors from calling me?

Not specifically. But if you tell your creditors that you have an appointment with CCCS, many of them will postpone follow-up calls. As part of your plan, the Consumer Credit Counseling Service sends a copy of the proposal to each creditor that you identify. When they receive this proposal, nearly all creditors will stop collection calls once they receive and accept your proposal. And as long as you make the agreed upon payments crafted by CCCS, you wont be afraid to answer you phone. Once you are enrolled in a plan, if you do get a collection call, you simply refer them to your credit counselor.

Will the use of CCCS help me stop legal action?

In most cases, by leveraging CCCS, legal action can be avoided or stopped because what CCCS does is work with creditors on your behalf. Since everyone is wanting to avoid legal action because of the excessive costs, CCCS arranging repayment plans is usually sufficient to stop creditor legal action immediately able to work with creditors toward a positive solution that will satisfy everyone and hopefully stop any legal action. However, some extra nasty creditors may not stop legal action until they start getting regular payments.

Are my creditors required to accept my CCCS's scheduled payment?

Because most creditors support the efforts of CCCS, it is rare that a creditor ever refuse to take payments through CCCS. It is the goal of CCCS to work out an arrangement that satisfies both the client and the creditor.

Why do I have to use CCCS instead of doing this myself?

The reason is that your creditors support credit counseling organizations to act as an impartial third party to work out a suitable arrangement that gets you out of debt and them paid. Creditors will not offer the special arrangements and terms to the consumer directly but you can always negotiate with the creditor on your own as that is completely acceptable. But to get the significant benefits afforded to clients of CCCS, like lower interest rates, lower monthly payments, no more late charges, and waived fees for being over your credit limit fees, you have to use a credit counselor. Because CCCS is nonprofit, credit counselors have the power to secure these benefits that will not be offered to consumers under any other circumstances.

What are some good questions to ask the credit counselor?

Ask...

• How is the amount of my payment determined?
• How will I know that my creditors received payments?
• How often do I get reports on my accounts?
• Can you get both my payments and interest rates lowered?
• What happens if I don't keep up my end of the agreed-upon plan?
• Are there any debts that will be excluded from my repayment plan?
• Who do I contact if I experience problems with my creditors?

How long will it take to get started?

Anywhere from 45-90 days. In order to get the negotiations started, formalized, and accepted, the creditors must receive a documented plan and then notify CCCS that they will accept the terms. Once everything is finalized and in order, CCCS will make a payment to your creditors ever 30 days.