|
(continued
from previous page) FAQ about debt and credit counseling
By Bankrate.com
What
do I ask the credit counselor?
A few questions you should ask are:
How do you determine the amount of my payment?
How will I know my creditors have received payments?
How often can I get status reports on my accounts?
Can you get my creditors to lower or eliminate interest and finance
charges or waive late fees?
Is a debt-repayment plan my only option?
What if I can't maintain the agreed-upon plan?
What debts will be excluded from the debt-repayment plan?
Who will help me if I have problems with my accounts or creditors?
Bankrate.com has more
questions you should ask.
Back to top
Are these
e-mails that promise to eliminate my debt for real?
No. Your debt is your debt -- end of story. There is not a magic
wand to wave away your debt problems. Some
of these companies say that they have found a way around the
law -- but if this were true, all credit card companies would be
out of business. Other companies will promise to negotiate with
debt collection agencies to get your debt reduced. But you
can do that yourself -- no middleman required.
Back
to top
How long will
it take me to pay off my debt?
It depends on the interest rate you are paying and how much you
can pay out each month. The more you pay, the quicker the balance
disappears. For example, if you paid only the minimum amount due
on $8,000, which is the average amount of individual household credit
card debt, at an average annual percentage rate of 13.9 percent,
it would take 278 months to be rid of your debt. In that time, you
will pay $6,792.25 in interest. If you added an extra $100 to the
payment each month the savings are dramatic. It would be paid off
in 33 months, and would cost you $1,639.13 in interest.
Use this Bankrate calculator
to figure out how long you will be paying off your debt.
Back
to top
Will debt-counseling
affect my credit?
Using a debt-management plan to pay off debt won't hurt your credit
score, but it may make it difficult to qualify for new credit.
When you enroll in a debt-management program, you
write a monthly check to a credit-counseling agency and the agency
pays your creditors. A debt-management plan usually lasts three
or four years. A comment stating that you're paying an account through
a credit-counseling agency appears on your credit report and remains
until the account is paid in full. Such a comment won't hurt your
credit score in the least.
However, if you get involved with a debt
management agency that is late making payments to your creditors
-- or doesn't make any payments at all -- your credit will be damaged.
Have a question you don't see cover here? Ask
our Debt Adviser, Steve Bucci.
|
