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Finding debt help you can
trust
Dear Debt Adviser,
I am 20 years old and am $4,200 in debt. I know
that it's not that much, but I have had this debt since the age of
18. I have tried calling creditors, but they will not lower my rates
to help me out because I have been late several times. Not because
I didn't want to pay, but because I didn't have the money at the time.
Dumb mistake! I am so confused about what to do now. I am trying to
get enrolled with a debt consolidation company, but I don't know whom
I can trust. If you can, please enlighten me on what I need to do
so I don't mark myself with bad credit!
Thanks,
Chad
Dear Chad:
At 18 years old, any amount of debt is too much, and by 20,
to still owe the original $4,200 is certainly more than enough to
cause you problems! You are on the right track, however, by realizing
the debt is a problem and wanting to take care of it before it gets
any worse. I hope that by the time you take my advice, you will
no longer be singing the blues, but rather, "When I was 21,
it was a very good year."
It sounds like you could benefit from working with
a reputable credit counseling organization to get your bearings,
understand your options and perhaps get interest rates reduced by
a repayment plan that is affordable and will help you pay down your
debt as quickly as you can realistically afford.
You state that you do not know whom to trust when
it comes to consolidating your debt. Welcome to the crowd! Recent
news, congressional hearings and lawsuits concerning crooks in the
credit counseling industry are enough to cause concern for anyone
seeking help.
There are several red flags of which you should be
aware when choosing a credit counseling agency:
- Cold calls -- My first rule is don't use
anyone who solicits you either over the phone or by spam over
the Internet. Do your own research, or ask friends and family
for a name they trust.
- Large upfront fees -- Fees should not exceed
$50 to establish a debt management plan or $35 (because of your
debt size) each month to maintain your plan.
- Drive-thru counseling -- A counselor should
meet with you in person, by phone or over the Internet for at
least 60 minutes to determine the best solution for you, not the
quickest for them.
- Pressure sales pitch -- Credit counselors
are in the service, not sales, business. You should feel encouragement,
but not pressure, from the person to whom you speak.
In addition, before you sign an agreement with a credit
counseling agency, follow the guidelines below.
- Check with your local Better Business Bureau to
determine if the agency you choose has a satisfactory rating with
the BBB and if any complaints against it have been successfully
resolved.
- Read the debt management plan agreement carefully
and make sure that it describes all fees and services associated
with the plan. Also, the agency should be willing to work with
all your creditors regardless of whether they support the
organization with fair share contributions.
One additional item that is implied, but that I wish
to spell out. You will need to stop spending beyond your means (continuing
to charge purchases) in order to get out of debt. If you do all
this, then 21 will, in fact, "be a very good year."
Good luck with paying off your debt.
The Debt Adviser, Steve Bucci,
is the president of Consumer Credit Counseling Service of Southern
New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.
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