Find Out About The Agencys Services And Costs
The services offered and the fees charged by credit counselling agencies can vary greatly.
Ask the following questions about services to help find an agency that is right for you:
- Is the first consultation free
- What services does the agency provide
- Will the agency provide you with a written proposal describing how they will help
- What type of support will the agency give to help you to improve your money management skills
- Will the agency provide you with monthly statements of payments
Does Having Bad Credit Mean Im Being Punished For Bad Financial Habits
Its important to remember that having bad credit doesnt always mean that someone was irresponsible. There are a myriad of life circumstances that can impact finances and set you back such as unexpected medical bills, loss of employment, a natural disaster, etc. Having a low credit score can also mean that youre simply just starting out, and have yet to build any credit. Bottom line: Many people find themselves having a low credit score through no fault of their own.
But regardless of the events that lead to it, there are some general side effects of having bad credit.
Higher interest rates
A lower credit rating could mean a higher risk for default. Lenders may compensate by setting interest rates higher to protect their investment. So, borrowing a large amount could mean paying a large amount of interest over time.
Difficulty getting approved altogether
If you have an unusually low credit score, you may see few lenders willing to take a chance on approving you for a loan or credit card.This is a realistic situation that many with no credit find themselves in such as a student, applying for a loan. In this case, getting a cosigner is usually the route to take.
Difficulty renting a place of residence or getting a phone contract
Paying more security deposits
Frequently Asked Questions About Credit Counseling
That depends on your accounts. If you hold accounts jointly, then you would need to go through credit counseling and debt management program enrollment together. If you maintain separate accounts and only wish to enroll your debts, then you can complete the process without your partner.
Thank you for submitting your question!
Our financial coaches will review it and reach out to you directly with the answer at the email you provided. If you prefer not to wait, please call to speak with a certified credit counselor for a free consultation.
For immediate assistance, please call:
Best Overall: Cambridge Credit Counseling Corp
Cambridge Credit Counseling Corp.
We chose Cambridge Credit Counseling Corp. as our best overall due to their excellent user ratings and the variety of counseling services they offer.
High user satisfaction ratings with Consumer Affairs
Offers credit counseling, debt consolidation, student loan counseling, bankruptcy counseling, housing counseling, and debt management plans
Transparent about fees
Physical offices are only located in Massachusetts and New York
Established in 1996, Cambridge Credit Counseling Corp. is a 501 not-for-profit agency that provides an array of services for debt-strapped consumers. This company was chosen as best for our ranking due to their exceptional user reviews as well as their accreditation. Not only is Cambridge Credit Counseling Corp. a HUD-approved housing counselor, but they are also accredited by the Financial Counseling Association of America and a member of the National Foundation for Credit Counseling, the two major trade associations within the credit counseling industry.
This provider provides a free consultation to help gauge your needs and your next best steps. They also offer an array of services including credit counseling, bankruptcy counseling, student loan counseling, housing counseling, and debt management plans.
How To Choose A Nonprofit Credit Counseling Agency
Obviously, you need to choose an agency approved by the federal government. That leaves a lot of options.
Some questions to ask these organizations before making a choice include:
- What services do you provide?
- Can you help me create a strategy to avoid future debt?
- What do your services cost? If I cant afford them, can you waive the fees?
- What training and certification requirements have your counselors received?
- What assurances will I have that my ID information will be kept secure?
- Are your counselors paid based on selling me additional services?
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How To Get Free Credit Counseling In California
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In a Nutshell
To receive free credit counseling assistance in the Golden State, youâll need to research and ultimately choose a nonprofit credit counseling agency to work with. Once youâve chosen an agency, youâll want to familiarize yourself with what to expect from the California credit counseling process.
Written byAttorney Kassandra Kuehl.
If youâre struggling to manage your debts, itâs important to understand that there are many free, reputable resources available that are designed to help you navigate your financial challenges. One of the best ways to begin figuring out how to manage your debt and achieve your finance goals is to participate in debt counseling, also known as credit counseling.
Information To Research Before Talking To A California Credit Counseling Agency
Before you make contact with a California credit counseling agency, take care to make sure it is accredited. The National Foundation for Credit Counseling creates and enforces accreditation standards. If the NFCC has not accredited the organization youâre looking at, consider contacting a different nonprofit. Accreditation ensures that an organizationâs operations are licensed, that an agency complies with consumer credit disclosure requirements, and that it otherwise adheres to certain professional standards within the credit counseling field. In short, ensuring that you only work with an accredited organization helps to guarantee that youâre working with a legitimate operation and are therefore not going to be taken advantage of by that California credit counseling organization.
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Housing And Education Counseling
Credit counselors can provide housing counseling such as pre-purchase counseling, foreclosure prevention counseling, and homebuyer education. Many lenders and government assistance programs require a certificate of completion from a homebuyer education course as a condition of the mortgage. These courses teach consumers budgeting, finding a mortgage, paying taxes, home inspections, and other necessary lessons in the home-buying experience. The classes are offered by nonprofit organizations approved by the U.S. Department of Housing and Urban Development .
Getting Your Credit Counseling For Bankruptcy Certificate:
- Must be completed within 180 days before filing for bankruptcy
- 60-90 minutes in length and can be completed online or by phone in English or Spanish
- Personalized counseling session includes budget analysis, financial management, and explores possible alternatives to bankruptcy
- Includes a one-on-one session with a certified counselor and a customized action plan
- Same low price for single or joint filers
- Live counselor support Monday through Saturday
- Fast certificate delivery to you and/or your bankruptcy attorney
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Chat With A Counselor
Next, you will chat with a counselor who will review your file, discuss payment plans and other alternatives to bankruptcy, and help you prepare for the rest of the bankruptcy process. Some topics your counselor might cover include:
- Tips for handling financial challenges, such as auto loan delinquency
- Direct negotiation with your creditors
- Direct negotiation with your mortgage servicer
- Supplementary housing counseling
- A debt management program
- The dangers of other bankruptcy alternatives, such as payday loans and debt settlement
To reach an NFCC certified counselor, simply click Chat when you are ready. We are available to support you: Monday-Thursday, 8am-8pm , Friday, 9am-6pm , excluding major holidays.
Important note: Chatting with a counselor is a mandatory part of the counseling.
The Second Course: Post
Bankruptcy filers must take a second coursecalled debtor educationafter filing for bankruptcy. The debtor education course provides the filer with financial management tools, such as tips for creating a budget and rebuilding credit after bankruptcy.
You’ll prove that you’ve completed the course by filing the certificate of completion with the court . The certificate must be filed within 60 days of the date first set for the meeting of creditorsthe one court appearance all filers must attendor the court will dismiss the case.
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What To Do During Your Debt Management Plan
Ask the agency for regular written status reports on your plan. Ask also for receipts of all transactions involved with the debt management plan. This will provide you with proof that the agency made your payments. While you’re in a debt management plan, companies you owe money to may stop sending you monthly statements.
Carefully review your status reports or monthly statements. Make sure the agency is paying your creditors on time. This will avoid any late fees or negative entries on your credit report.
You can also monitor your progress, by reviewing your credit report. It includes information on whether you’re making regular payments.
How Can I Get Free Bankruptcy Credit Counseling
Itâs possible to take the credit counseling course for free by having the fee for it waived. Most credit counseling providers charge a fee of $10 – $50 for the course. However, the bankruptcy laws and rules implemented by the Office of the U.S. Trustee make it clear that your ability to pay ultimately determines whether they can charge you for their service. While each provider has a different policy for handling fee waiver requests, if your income is below 150% of the federal poverty guidelines, itâs presumed that you are eligible for a fee waiver.
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You Are Required To Take Credit Counseling Courses As Part Of The Bankruptcy Process
The changes to federal bankruptcy laws in 2005 established credit counseling requirements for all individuals seeking bankruptcy help. With these bankruptcy law changes, any debtor seeking bankruptcy must complete and obtain a certificate of completion of an approved credit counseling course and a financial management course:
- Debtors must obtain a certificate of completion of a credit counseling course prior to filing the bankruptcy petition. Pre-bankruptcy credit counseling educates debtors about the options available to them.
- Financial management course: You must obtain a certificate of completion of a financial management course prior to the final discharge of your bankruptcy debt. This pre-discharge counseling session enables debtors to confront financial setbacks and learn how to avoid habits that would cause the debtor to return to the same financial turmoil.
Although brief credit counseling sessions are now a requirement, these sessions are also beneficial for most debtors. An experienced credit counselor will evaluate your income compared to your lifestyle and spending habits and can make recommendations on how to live within your means.
Are You Comfortable With The Credit Counsellor
If the credit counselling agency seems to fit with your needs, ask to meet with a credit counsellor. This way you can see if it’s a good match. No reputable credit counselling agency will charge for the first meeting.
Make sure that you trust the counsellors opinion and judgment. If you’re not comfortable, ask to switch to another counsellor.
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Create An Account At Debtorccorg
Begin your process by going to www.debtorcc.org. You can use any approved agency. However, Upsolve believes DebtorCC provides the most user-friendly experience. You will then see two options a Pre-filing Credit Counseling option and a Post-filing Debtor Education option. Please select the Pre-filing Credit Counseling option. Even though it says $14.95 disregard this at the moment. After you select the Pre-filing Credit Counseling course you will need to create an account using your first name, last name, email address, and a password of your choice.
Debt Repayment Supportavoid Filing For Bankruptcy Stop Collection Calls
Take the opportunity to speak with a credit counsellor and review your monthly budget, including your income, expenses and debt payments. Speaking with a counsellor is free and completely confidential. Your credit counsellor will provide you with information and guidance to help you make an informed decision about your finances.
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Counseling And Education Requirements
Pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy debtor education must take place after you file.
You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are numbered, and produced through a central automated system.
Wait 72 Hours To See If Its Approved
After you have completed the application, sign it and send it along with all supporting documents to. The supporting documents are your paycheck stubs, W2s, or other information regarding any other sources of income you may have. Once the application and all documents are submitted, youâll receive a response within 72 hours to let you know if your fee waiver application has been approved. You will be notified by email, so make sure to keep an eye on that. If you have any questions regarding the response, you can contact DebtorCC directly to get answers.
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How Long Is The Post
Even though thereâs no set curriculum, the rules require certain topics regarding personal finance, financial literacy, and money management be covered. As a result, the debtor education requirement is a 2-hour course.
When done, you’ll receive a certificate of completion that you have to submit to the bankruptcy court.
Understanding Costs When You Get Credit Counseling
Consolidated Credits financial education director April Lewis-Parks details the costs of the two steps in the credit counseling process. The first step is entirely free, while the second step of enrolling in a debt management program has a fee structure thats set based on the state where the client lives.
|First credit counseling session
|Debt management program
|Fees vary by state, capped at $79 nationwide
With nonprofit credit counseling services, the initial counseling session is always free. You are not obligated to sign up for anything. That means you can get an expert opinion on your debt and the best way to get out of it without incurring another bill.
Once you decide to enroll in a debt management program, there are setup and monthly administration fees. Nationwide, those fees are capped at $79, but most people end up paying about $40. These fees are relatively low compared to other solutions, like debt settlement.
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Questions To Ask A Credit Counselor
- What Services do you provide?The ideal agency will offer various services, including budget counseling, financial planning, and debt management. Beware of agencies that try to lock you into a plan without reviewing your finances and accounting for your long-term goals.
- What educational materials do you provide? Most agencies will offer an abundance of free information and educational materials on managing credit and paying off debt. If your agency does not, its a red flag, and you should keep searching.
- Are your counselors accredited or certified by a third-party organization? Ask about the qualification process for becoming a credit counselor. Aim for an agency that uses a third party to train its counselors.
- What are your fees? Find out if there are initial, set-up, or monthly fees for participating in their programs.
- What if I cant afford your program? Ask about reduced or waived fees. Many nonprofit agencies will work with consumers for free or at a discount.
- How do you keep my information confidential? This can ease anxiety if youre worried about keeping your personal information secure.
- How are your employees paid? If employees are paid every time you pay for additional services, consider looking elsewhere.
What Is Credit Counseling
The plan may include a debt management program that nonprofit agencies like InCharge Debt Solutions offer to pay off credit card debt. Credit counseling also includes looking at your credit report to verify all accounts and educational materials to map out your financial future.
The service is free and can be done over the phone or online. Credit counseling does not directly impact your credit score, but if the advice provided helps pay down your debt with on-time payments, it can lead to an improved score.
During a counseling session, youll be provided the following:
- Budget Review A counselor helps you create a budget that includes personalized suggestions on cutting expenses
- Debt Analysis A review of the debt accounts in your credit report
- Recommendations An action plan with recommended debt solutions and alternatives available to you.
The action plan is only a suggestion. Credit counselors give you an understanding of your financial situation and empower you to take action if needed.
A study on credit counseling by researchers at Ohio State University found that those who received counseling reduced credit card debt by nearly $6,000 in the first 18 months. Thats compared to a $3,600 reduction by those who did not receive counseling. About 70% of the 12,000 participants said credit counseling improved their financial confidence.
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