One of the leading and most well–known "debt
counseling" services is Consumer Credit Counseling Services (CCCS). CCCS
helps consumers design "repayment plans" with their creditors. These
"installment plans" are typically a three to five year payoff agreement,
whereby CCCS arranges with your creditors to accept a "new" or reduced
monthly payment agreement, and, in some cases, a reduction in the amount of interest
costs. (This amount will vary depending upon the creditor). Once CCCS has determined
the total amount of monthly principal and interest you will need to pay your creditors,
you will be required to send them a monthly check in that amount. They will then
divide that payment among your creditors.
The Upside:
You will only need to write one check a month. CCCS will act as your financial manager and pay each of your creditors.
CCCS offers free classes on how to deal with debt.
The Downside:
CCCS mainly offers repayment assistance for consumers with "unsecured
debt" such as: credit card debt.
As for home mortgages and "installment" debt, you are on your own.
Some creditors will report the fact that you are paying your bills through CCCS in the form of a "statement" on your credit report. This "statement" could remain on your credit report even after you have fully repaid the debt. This, of course, may not be viewed favorably by creditors to whom you apply for credit in the future.
If you have existing open credit card accounts that you continue to use,
there is a possibility that your account could be closed
or simply not renewed. Credit card companies are constantly "monitoring"
accounts (reviewing your credit reports)
to determine whether you continue to meet their requirements for credit. The
fact that you have utilized the assistance of a debt counseling service may
send the wrong message.
A Point Of View:
The responsibility is yours. Having a history of being responsible for your
debts is one of the most critical factors used in determining whether or not a
creditor will extend you credit. Taking the responsibility and dealing with past
credit problems, restructuring repayment plans, or getting creditors to waive
the interest and penalties on an account yourself may seem like a great deal of
work, but the rewards and, most importantly, the experience
of communicating with your creditors will be of benefit to you time and time again.
Using CCCS to restructure and repay your bills is something you may want to think
about. Fulfilling your obligations yourself is always the best policy. However,
CCCS does offer free classes and information on debt
management that can be very helpful if you find yourself in a financial crunch.
