Credit

Ask Jean Thursday: Help From the NFCC

Posted by Jean

I have heard you mention credit counseling through the NFCC. There is an agency in my hometown. Can you tell me what kind of help they can give my husband and me? We have a large amount of credit card debt as well as equity line debt. We are paying our bills on time but can only pay minimums. Do they negotiate with the credit card companies on our behalf?

-Lisa, Alabama

Every year the NFCC assists over 3.2 million people who are struggling with their finances. For over 50 years, NFCC member agencies have offered free or low cost services (whether or not you’ll be charged for the help they provide depends on the member agency and the laws in your state) to those wanting to take control of their debt. The NFCC offers confidential help via phone (through their national toll-free hotline), online or in person.

Through credit counseling, the NFCC can help you to work towards paying more than the minimum amount on your bills. During a session, your counselor will address your credit issues and help you find ways to work towards solutions. “Adjusting the budget, decreasing spending and increasing income would be ways to find extra money to pay more than the minimum and get out of deep incredibly sooner,” says the NFCC’s Vice President of Communications Gail Cunningham.

If you’d like the NFCC to negotiate with creditors on your behalf, they can do that through a Debt Management Plan, or it’s commonly known, a DMP. A DMP is essentially a plan to help you tackle your debts. “After a thorough intake of all income, living expenses and debt obligations, if a Debt Management Plan is appropriate for the consumer, the counselor would contact each creditor and propose a new monthly payment,” says Cunningham.

A DMP will set up a payment schedule for you to repay what you owe. You’ll deposit funds with your credit counselor on a monthly basis. The counselor will then send those funds to your creditors. According to the NFCC, when you’re enrolled in a DMP it’s common for creditors to lower your interest rate and halt all late and over limit fees once the new payment has been accepted. “The goal is to allow the consumer to make all of his or her living expenses in full while still addressing debt reduction,” says Cunningham.

While the NFCC can help you figure out ways to pay more than the minimum and help you to craft a Debt Management Plan, helping you with your equity line debt isn’t something they can do directly. Typically, NFCC Member Agency counselors don’t deal with secured debt. The reasoning is they can’t lower the monthly payment on this type of debt. While they can’t deal with it directly, through a counseling session you’ll be able to discuss how you can cut expenses and work towards reducing your debts. “Even though the payment to that specific debt might not be lowered, the budget and other debts might be adjusted enough to allow the equity line of credit to be satisfied,” says Cunningham.