Help With Credit Card Debt

Credit card debt can overwhelm you very quickly. At least two million Americans a year turn to a credit counselor for help in getting rid of credit card debt. A credit counselor is a financial professional who will evaluate your situation and help you create a strategy to get out of debt.

Credit counselors can help you negotiate with the credit card companies for a lower interest rate and can assist you in getting miscellaneous fees such as late fees and over-the-limit charges, reduced or eliminated. The counselor may also negotiate how much you will pay each creditor every month. Once a payment schedule is set up, you will then make one monthly payment to the counseling agency, which will then disburse the funds to your creditors.

How do you know if you really need a counselor? The National Foundation for Credit Counseling (NFCC) suggests that you see a counselor if your monthly credit card payments amount to more than 15 percent of your take-home pay, if you can afford to make only the minimum payments on your bills or if you have to forgo paying some creditors in order to pay others.

You must take the time to find out how much debt you really have. List all your debts with the total balance, the interest rate you pay and the minimum payment due each month. You will need this information to give to the counselor during your first meeting.

To find a good counselor look at the U.S. Department of Justice's list of agencies that have been approved to counsel bankruptcy clients. Go to www.usdoj.gov/ust and click on "Credit Counseling and Debtor Education." The counselors listed here have met the government requirements for training and have undergone a criminal background check. These agencies are also bonded and they are all nonprofit organizations.

Another place to look for a credit counselor is the NFCC. To find them log on to www.debtadvice.org. All of the NFCC members meet training and ethical standards. They are bonded and are nonprofits.

The average counseling fee charged by an NFCC member is $25. Make sure all fees are spelled out in your written agreement and be sure to read it in full before signing it. To help you track your progress the counselor should send you a monthly statement that details the date and amount of all your payments. It is also wise to examine your credit card statements every month to make sure that all you payments are properly credited.

Avoid for-profit counseling companies. They have more of an incentive to get you into higher-fee debt management programs.