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DEBT FREE 247 DEBT CONSOLIDATION GUIDE

Credit cards are one of the leading causes of debt, no matter one's age or financial background. With the proliferation of credit card offers arriving in the mail, it is easy to find yourself with more credit cards than you really need. At first, small amounts of debt may be easily manageable, but as the debts accumulate, missed payments can occur with the subsequent raising of interest rates and a credit card debt that spirals out of control. Despite the ease of acquiring debt on a credit card, it is much more difficult getting rid of it. This is precisely why a credit card debt consolidation plan makes good sense. However, you should do your research ahead of time in order to know what you can expect to be offered in regards to interest rates and payment plans.

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There are several plans available for reducing and eventually eliminating credit card debt. They are "debt management", "debt consolidation", "debt negotiation", and "bankruptcy". Please refer to Debt Consolidation FAQ's within this site for an explanation of each of the plans. But before deciding on a plan, you should consider contacting a reputable credit counseling organization for advice. The National Foundation for Credit Counseling is an excellent directory for credit counselors who are accredited by the Council of Accreditation.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Beware of credit counseling organizations that:

* try to enroll you in a DMP before reviewing your financial situation.

* put you into a DMP without teaching you money management skills and budgeting.

*require advance payments into a DMP before your creditors have reviewed your financial situation and accepted you into their program.

* profess to be non-profit yet pressure you to make "contributions", another name for fees.

* insist on your personal financial information such as credit card numbers before sending you free information about the services that they provide.

* charge high up-front or monthly fees for enrolling in credit counseling or a DMP.

If your bills are out of control, you should consider seeking the help of a firm that specializes in helping people with unmanageable debt. Check with the Better Business Bureau, your state Attorney General or a local consumer protection agency to find out if any complaints have been filed against the company you are considering. Find out whether or not that company has a license requirement to work in your state.

Debt reorganization can be a complex and long process and there are some businesses out there that seem to be taking a quick route to debt reorganization when actually what they are proposing is a bankruptcy filling. Some firms may not explain all of the costs or in fact may be misrepresenting the terms of a debt consolidation loan by having you sign over your house as collateral. Other companies may be charging high fees to help you with your debt problems and then not follow through on the services they are selling to you.

If a company is requiring you to pay an advance fee that can range to several hundred dollars in order to guarantee a loan, don't. Some legitimate companies do require an advance fee, but this is generally for an application appraisal and not a loan guarantee. Guaranteeing a loan or even representing the likelihood of a loan is not something a legitimate creditor will do and it may be illegal in some states. There is a federal Telemarketing Sales Rule that states that a telemarketer or seller that does guarantee an extension of credit or a high likelihood of a loan can not ask for nor accept payment until after you've received the loan.

There are other claims that you should be cautious of - companies representing themselves as " credit repair clinics ". These types of companies may promise, for a fee, to clean up your credit report and often appeal to consumers with a poor credit history. If there is inaccurate information in your credit report, you already have the right to have it corrected and shouldn't be charged a fee. No company, no matter what they promise, can remove accurate information from your credit report. Services must be fully performed before you are charged and there are federal and state statues that insure this. Your credit report can only be improved by time and repayment of your debt. No company can "fix" your credit report.

Do your homework when you are seeking help in correcting your financial problems. Don't rely on verbal promises, find out what services are provided and what they cost. Make sure everything is in writing and carefully review your contracts.