Are you struggling to balance your budget at the end of the month?
Do you lie awake at night wondering how to pay your bills?
Are your credit card bills snowballing out of control and making income tight?
Millions of Americans struggle with credit card bills, medical debt, student loans and other financial challenges that seem impossible to overcome. But there is hope: Get debt help from the Financial Counseling Association of America.
With the guidance and support of a non-profit credit counselor, you can take control of your finances and work toward a debt-free future.
The FCAA is made up of leading non-profit credit counseling agencies whose mission is to help people find the best options to overcome their debt.
Credit counseling is the process of meeting with a certified credit counselor to review your budget, discuss a plan for repayment of your unsecured debts and help you set financial goals. Credit counseling provides the support, guidance and education people need to get out of debt through better money management.
The certified counselors at FCAA member agencies are trained in budgeting, debt management and consumer credit. Their free or low-cost financial advice has helped millions of people over the years.
Get connected with a trusted certified credit counselor. They will review your personal financial situation without judgment and help you devise a plan to get back on the road to financial well-being.
There are multiple options for debt relief, but not all have your best interests in mind. Debt repayment is not one size fits all. Everyone’s financial situation is different, and the help an individual needs to repay their debt should be best suited for that individual.
FCAA-affiliated credit and debt counselors work to understand your specific circumstances and will guide you to the best option for debt repayment.
Let’s take a look at options people may consider as they seek debt:
Sometimes referred to as debt consolidation, a debt management plan (DMP) can only be offered by a licensed credit counseling agency.
A debt management plan is designed to repay all of your credit card debt in full. One monthly payment is made to the credit counseling agency, which then distributes the payments to the creditors.
Concessions or adjustments are often given to consumers enrolled in debt management plans. This can include lowering interest rates on outstanding debt, eliminating or reducing late fees and bringing past-due accounts current.
Debt management plans are tailored for your unique financial situation and designed to have your debt paid off within five years. Because monthly payments continue to be made to your creditors, your accounts will not go into collections.
Fees for a debt management plan can include a one-time set-up fee and recurring monthly fees that are regulated by states that regulate credit counseling.
You may see a slight dip in your credit score when you first begin your debt management plan. However, over time, you will build a positive payment history, and most consumers see their score go up as they make payments.
A personal consolidation loan can be a good solution if the interest rate is lower on the new loan than what is currently being charged on the outstanding debt. However, this approach to debt relief is only successful if the consumer addresses the behaviors that got them into trouble in the first place.
The FCAA encourages borrowers to make loan payments on time, pay more than the minimum due and learn healthy credit card management. In other words, reduce or cease credit card spending until the consolidation loan is paid off.
Debt settlement, sometimes called debt negotiation, is an approach to paying off debt where the consumer offers to pay their creditors a percentage of their outstanding debt to satisfy the full amount owed. Consumers can negotiate terms on their own or enlist the help of a debt settlement company.
Debt settlement companies charge fees for their service – either a percentage of the debt enrolled or a percentage of the debt forgiven.
This option can be dangerous because reaching a debt settlement requires that monthly payments stop being made to creditors before you have an agreement. While the agreement is being negotiated, the individual’s accounts can go to collections. Additionally, interest continues accruing and late fees continue to be charged on your accounts. If your creditors choose not to forgive your debt, the amount you will then owe will be significantly higher.
Even if your creditors forgive some of your debt, there are additional costs. You may have to pay taxes on the amount of debt forgiven as well.
Debt settlement will show as a negative on your credit report, though it is hard to determine how much of a negative effect it will have on your credit score.
Bankruptcy is an option for those with burdensome debt loads who do not have enough income to pay off their debt. Before considering bankruptcy, speak with a credit counselor to find out if this is the best approach for your situation.
If you decide that bankruptcy is the best option, you will need to speak with an attorney. Even if you have to choose this option, FCAA member credit counselors are here to help you rebuild after bankruptcy.
Debt relief organizations are legally bound by certain rules. Here are a few things that debt relief companies and organizations cannot do:
The journey to financial wellness begins with reaching out for help. Take the first step by contacting an FCAA-member credit counseling agency today.
A certified credit counselor will listen to your unique financial situation, review your budget and help you understand your options. Your counselor will recommend the best option for repaying your debts and can help you make a personalized plan to move forward on the path to debt freedom.
