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DEBT CONSOLIDATION FAQ:
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Debt Consolidation FAQ
Why can't I negotiate with creditors
on my own?
Why can't I keep paying off my
creditors on my own?
How much will it cost to be on the
Debt Consolidation Program?
How will joining a Debt Consolidation
Program affect my credit rating?
Can I send in more money if I get a
better cash flow?
Should I keep paying my bills in the
period before I send you my first payment?
After I pay off one account, can I pay
less?
Will I receive harassing phone calls?
Q: Why can't I negotiate with creditors on my own?
A: In some cases, you can negotiate with creditors on your own to
arrange payment or have positive information reported to a credit bureau.
However, to get the benefits of lowered monthly payments, lower interest
rates, stopped late charges, and waived over the limit fees, you should
get help. As a non-profit organization, our credit counselors can secure
you these benefits not usually available to credit consumers.
Q: Why can't I keep paying off my creditors on my own?
A: If you keep paying just the minimum to your creditors at the
current interest rate, it will take you much longer than if you paid off
your debt through our debt consolidation program. A $10,000 debt usually
takes 32 years and $24,500 to pay off, if you are paying the monthly
minimum of 2.5% of the balance at an average interest rate of 18.5%.
Because we may be able to reduce your interest rates, stop over the limit
fees, and so on, it will take a lot less time to pay off your debt through
us. Chances are, in the past, all your debt payments have just gone to pay
off interest. You probably haven't even reduced the balance! On average,
our clients pay off their debts in 3 to 5 years, depending on individual
circumstances.
Q: How much will it cost me to be on the Debt Consolidation
Program?
A: Due to the fact that this is a non-profit organization, we do not
charge any advance fees for our service. We do request that clients make a
monthly contribution to our organization to cover the costs involved in
handling the accounts on a monthly basis. As a non-profit organization, we
depend on these small contributions to meet our operating costs. Our
clients find that their increased cash flow from lower monthly payments,
interest rate reductions and stopped late charges more than covers the
cost of the monthly contribution.
Q: How will joining a Debt Consolidation Program affect my
credit rating?
A1: Do you have a good credit history? If yes, then you should be
aware that your credit report may state that you are working through a
counseling service. We can't guarantee how future creditors will interpret
this information, but we believe that it shows you are trying to get help.
Your credit report probably states that you've been carrying balances,
made late payments in the past 7 years, or even missed payments, so it may
not be as perfect a credit history as you think.
A2: If no, then we can only help you. If you make your payments in
full and on time, then many of your creditors will "re-age" your account,
which means they will show your accounts as current after several
payments. In general, if you are paying off your debts, that can
revitalize your credit report. Showing that you are working through a
counseling service may show future creditors that you wanted to pay off
your debts in full.
Q: Can I send in more money if I get a better cash flow
?
A: Of course - you can always increase your monthly payment. The more
you pay, the faster your account will be paid off. Just let us know you
want to increase your payments beforehand so we can figure out which
creditors to pay more money.
Q: Should I keep paying my bills in the period before I
send you my first payment?
A: That's your decision, however we recommend that you do if you can.
There is a brief negotiation period of approximately 30 days after we
receive your first payment. During this time we make arrangement for
payments with creditors. If you miss due dates for bills during the
negotiation period, you are at risk of negative information reported to
the credit bureau.
Q: After I pay off one account, can I pay less?
A: That's your decision, but we highly recommend that you pay the
same amount and transfer whatever you used to pay for the other accounts
to a high interest account. That way, as you pay off each account, you end
up paying more to the remaining account, speeding up the process without
changing your monthly spending plan.
Q: Will I receive harassing phone calls?
A: You might the first several months on the program since it takes
time for your creditor's collections department to find out you're with a
debt consolidation service. If you get a harassing call, inform the party
to call our office and speak to your account specialist. If you get a call
from a collection agency that is not part of your creditor's company, we
will provide you with a cease and desist letter. 3rd party collection
agents must obey this letter, according to Fair Debt Collection Practices
Act. Make sure you tell your account specialist if you receive any calls
from a collection agent.
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