Credit Counseling and Debt Management

Parent Q&A

  • I'm seeking a referral to a cash up front (no hidden agenda) negotiator for debts. This is in service of a trust set up to pay the debts of an individual.  There's not quite enough money to cover everything, so there needs to be some negotiation and seeking of letters in compromise.  About half the debt is to the IRS.  I am aware of , but suspicious of "free" services, and also this situation is different from the usual bad debt case: here there is a one time windfall available to pay down debt.

    Please, please contact the IRS first. They will negotiate with you for payment. Many of these services do nothing more than contact the IRS as you could do on your own. The IRS wants payment and if you can only pay a certain amount to extinguish the debt, they will work with you. If you really want someone to represent you, find a CPA with experience working with the IRS.

    Start with NFCC. You are likely to do better with them than with a low-cost private negotiator; they are a nonprofit with a well-established history. (Their services are also not necessarily free, but the counseling agencies that work with them follow a fixed fee schedule to keep costs affordable to consumers.) You can also negotiate with the IRS directly; there are instructions on their website to pursue that. At the end of the day, they are just looking to get paid, and are generally amenable to working out plans for unique circumstances.

Archived Q&A and Reviews


Debt consolidation for exhorbitant credit card debt?

May 2010

I said this would never happen to me, but here I am with exhorbitant credit card debt. Periodically I receive cards in the mail from companies who say they can lower my debt. A friend of mine is doing this for a $60,000. debt. They are charging her a $9,000.00 fee. That sounds like a lot, but I have no idea about these things,. Any info, recs would be appreciated. anon

I used a debt consolodation loan from my very trustworthy credit union. There were no fees, just interest on the loan that was much, much lower than credit card interest. -- no debt again

Call your credit card company and start talking. You will be able to close you account and work out a reasonable interest rate to pay off your cards in a few years. You don't need and agency to do this. Just keep pushing they will try to redirect you but let them know you can't afford this. They will ask you about 10 questions to see if you qualify or not. Then burn all of your cards or it will just happen again. Good Luck recovering credit card user

Ever dealt with a debt resolver? I Need advice!

Oct 2008

Hi: I have a credit card that I have been paying of for a long time. It was my ''emergency'' credit card but now with the way things are I've used it more than I should have. My debt is past $7,000 now and given my new situation I think I can no longer afford to pay the card with the minimal balance I have. I was considering contacting a debt solution company but I don't know if they can help.

Can you give me your experience with a debt consolidator? debt consultant? I am not sure what they are called. Were they able to really help you or did you think it was a waste of time? AND if they did help can you PLEASE recommend a good one to me? You hear all these ads on the radio but don't know which ones will really help and which ones will just take my money and do miniscule relief.

Thank you! Desperate to get rid of my debt!

BEWARE! I worked with Consumer Credit Couselling, and they did not deliver on their promise. What I found was that 1)I gave up all my credit cards to them in 1989 2) I made steady payments for 2 years to them always on time 3) they didn't actually get the creditors to stop charging interest as they claimed and 4) they made the agreed payment to the creditors late every month, not to the agreement they promised. It was a disaster, and wrecked my credit worse than a bankruptcy for 7 years. Grit your teeth, give up something else if you can at all because this is not the solution. If you only have one card that is hurting you, call the creditor and see if you can work something out -- they would rather work with you than get nothing. And demand to talk to a supervisor, get their name, and be ready to write in triplicate to the supervisor, the company president, and somebody that can scare them (senator, congress, governor, major media) with a cc: to the others to let them know you are one of those Americans caught in the credit crunch looking for relief. Companies are scared to be called out as heartless in a public forum, because other consumers will despise them, especially with the train wreck of an economy we have now. anon

Congrats on trying to take charge of your finances! I recommend Consumer Credit Counseling Services. They have been around a long time and recently merged with Money Management International. CCCS/MMI helped consolidate my credit card debt and lower my interest rates. I now pay them one monthly payment which they disburse to the credit cards. I've had to do my own emotional work around money and budgeting, but it has been GREAT to have them contact creditors on my behalf and do all the negotiating. They are a non-profit, totally legit, and came highly recommended. Most other services are for profit enterprises that don't necessarily serve as consumer advocates. CCCS/MMII does charge a small monthly fee ($20 or so, depending on your debt).

Their website is It is super easy to sign up through online. Someone will call you to do an intake, you provide creditor info, sign some papers, and you're good to go. good luck!

I feel your pain! My debt spiraled way out of control after taking time off of work to stay withy my baby, coupled with other circumstantial issues that plunged us wildly over our heads with credit card debt.

As a result, my husband began to research the debt solutions market and various options, and decided to start his own business, helping people settle their debt.

Here's what I know about it: there are two basic options you can go with: a debt consolidation company like CCC (Money Management International) or a Debt Settlement company.

Debt consolidation companies won't really lower your monthly payment, and, frankly, tend to work on the side of the credit card companies (many of them are divisions of credit card companies).

Debt settlement companies will negotiate with your creditors to ''settle'' your debt for a fraction of the original amount. This is something that creditors are legally required to do, and you could even do this yourself, although it can be worth it to pay a debt settlement company to take care of this for you if you have many credit cards and a lot of debt, they can often get better results for you, much more quickly.

That being said, if you just have a small amount on one or two credit cards, it's probably worth it to just do it yourself. For one thing, not all debt settlement companies are trustworthy, and some are really expensive, charging high fees (although that pays for some pretty good services, I've found, again, not worth it if you're just working with one or two creditors).

In your case, I think you can probably take care of settling your debt yourself. Just do a little online research with the State Department and check out the resources with United Consumer Advocacy Network. Best of luck! Been there

The debt resolvers need to get paid. Like most things, you can save $ by doing it yourself. Here is what I have done and professional debt councellors told me it was the best way.

#1- Look at your debts, use a composition book and write in columns each debt, interest rate, finance fee, suggested minimum payment, and what you paid. Each month add these columns so you can clearly see what is going on.

#2- Pay the least on the lowest interest rates and the most on the highest ones.

#3- As your payment record gets better, you can call them and ask for lower interest rates. Tell them you have a lower rate offer and that you would prefer to stay with them because their collections people were not as mean to you or whatever, ask them to match or better it and they will tell you what they can do,,,call every 6 months and keep getting it lowered.

#4- Look at your other expences. You can drop cable, caller ID, netflix, etc for awhile and have an extra $100 or so to knock em down with. Drawers too full? Have a yard sale..costs you nothing, is fun, and there is cash for the week you can put on the cards.

#5- Take them out of your wallet. If you need to use it for something make it a special event. Use cash and you won't buy a bunch of on sale stuff that will sit in your cupboard while the $ is sittin on your card earning interest for the bank.

I hope this helps. I personally charged my SAHM years and had to pay them back. It takes a long time! You can do it!

Drowning in debt; consolidation?

Sept 2008

Hi all, I can't afford a financial advisor. Basically, we bought a house in the east bay before our house in SF (bought 4 y ago, 100% financing) sold. Then the market took a down turn and it didn't sell. It's being rented, but we recently had to stop making payments on our mortgage, as we simply didn't have the money. It's still on the market and we hope to get an offer for a short sale.

Meanwhile, we also have managed, somehow, to rack up close to $100,000 in credit card debt, much of it at high interest rates (some of it was used to cover closing costs for our new house). We own our own business and it's incorporated, but not enough money is coming in lately as the economy has slowed.

My question is: has anyone used one of those debt consolidation services before? I know it lowers your credit score, but at this rate we'll never be buying another house again, so that may not matter too much. We only have one car, paid for, so we won't be buying another one for awhile, either.

Thanks for any and all experience and advice. And please, we are humbled enough as it is; no 'I told you so's''. Thanks. Super Stressed Mama

Time to start over. Bankruptcy is the answer. Debt consolidation will only prolong the inevitable. Plus, you'll have to delay filing since it would probably be a presumption of abuse if you filed right after. And you risk losing your primary home in foreclosure if you're not protected by bankruptcy and can't make the payments. Since you have an income and own homes probably chapter 13. We don't own one and had low income so we qualified for chapter 7. Attorney made us wait months to file since we had taken out an unsecured loan and he didn't want us to be accused of abuse. The wait really hurt us. You probably don't want that to happen which is why you shouldn't consolidate. Start interviewing bankruptcy attorneys now would be my best advice. There is light at the end of the tunnel. It feels great not to have to pay any more credit cards. Good luck. Anon

Since there are a lot of charlatans in the debt consolidation business, you may want to read the FTC's page on what questions to ask and what to be aware of when you're looking for a service provider in this area. The link to the FTC site is here: Good luck! anonymous

My credit is a mess - service to help me clean it up?

May 2007

My husband and I are trying to get our ducks in a row to buy a house. As if the cost of housing weren't enough, his credit is a disaster. In addition to an old bankruptcy he has had several bills go to collection. We're not even sure what all of these are for. I hear that there are services you can pay to help clean up your credit, but I'm naturally nervous about passing all of this highly confidential information over to someone in this age of identify theft. Can anyone recommend a trustworthy service or person who might help? Thanks. anon

You can fix your credit yourself. It just takes time. My husband left me in 1997 with approx. $50,000 debt. Wtih three young children, I struggled for two years making payments against the attorneys advice. Finally in 1999 I ended up filing bankruptcy. Since that time, I diligently rebuilt my credit and am now in a position to buy my first house with 95% financing!

You need to pay down your debt. Contact the lenders and work out payment arrangements etc. Most people are willing to work with you as long as you keep your promises and they see you are serious about paying off the credit. In my case, the bankruptcy had wiped out my debt. I slowly got three credit cards and actually purposely kept a balance on them and slowly paid them off, making payments on time. I also purchased a car with a friend as a co-signer and after making payments on time for five years, paid that off last fall. I have absolutely no debt at this time. Now that my bankruptcy is over 7 years old and I have shown that I am responsible with credit, my credit score is in the mid 700's which is considered very good.

Educate yourself on how credit scores work, and make sure you check your credit reports (from all 3 bureaus) regularly. You can get a free report from each bureau once per year You will be surprised at how many errors can appear on your reports and monitoring them and getting errors fixed is crucial. I did everthing online, after you pull your report, the credit bureaus actually tell you what creditors will think of you when considering your credit. They give you suggestions that help you correct spending habits, or payment habits etc. Another tip is not to keep applying for credit (or trying to get credit). These things reflect badly on your credit/fico scores, also make sure you keep your credit card accounts open, even if they have a zero balanc, this is important is establishing how long you have had credit.

I think I've covered most points. You can do it. Good Luck! Anon

There are some credit counseling charletans out there so be careful. I worked with some of the various Consumer Counseling Service branches when I was monitoring federal grants. It is a legitimate organization and I am sure they will be able to help you. Information about the East Bay office can be found at Good luck. Joann

A lot of people with bad credit have had their lives ruined by credit repair services. It used to be that these services would make erroneous claims to the 3 credit bureaus and for a month or two you could go out and get a loan until the claims had been answered and your credit was right back where it began. In recent years the laws have changed and this practice can actually further damage your credit. After the claims have been looked at, your credit report may look even worse. The only people who clean up are the credit repair people who now have your money.

The only other services that are safe to use are the ones that make legitimate claims about your credit. It's a waste of money since you can do it yourself and you'll do a better job than they do since it's your credit and not theirs. They often make mistakes. Whether you do it yourself or not, it's extremely risky to make a claim to the credit bureaus so I wouldn't recommend contacting them regardless whether it's you or somebody else doing it, unless it's something that's glaringly inaccurate (i.e. a mortgage you paid off 10 years ago that's showing up as current and late).

Here's something you should know: Once a debt in collection has been satisfied, it takes 7 years to fall off your credit report. What that means is that if you have debt in collection and you only pay a portion of it each month, the 7 year clock hasn't even started ticking yet. This means that until you've paid it off or had the creditor write off the remaining balance, it's going to stay on your credit report as a pre-7 year item. In other words, it could be on your credit report for 20 years. So my advice is to take care of any unpaid debts in collection first.

I'm going to be honest here, but with the subprime mortgage market falling out and the interest rates going up, you're going to have a hard time getting a mortgage unless you have a ton of savings (around $100,000 or earn an extremely high salary like in the 6 digit range). Unless you're buying in a market where real estate is very inexpensive (not the Bay Area that's for sure), you're much better off renting.

So to summarize:
1) Pay off or settle collection debts ASAP
2) Pay down your regular debt (credit card, car loan, etc.)
3) Pay on time (never be late)
4) Save money each month

One last thing: Be careful with credit counseling (not to be confused with credit repair). Bad services won't pay your creditors on time and your credit will get even worse. Good credit counseling services will pay on time, but you probably won't be allowed to have a credit card at all during the years you use the service. Also, credit counseling will show up on your credit report and for some items, the 7 year clock won't start until you've finished. Know Through Experience

Grad student with credit card debt

April 2007

I need help managing my credit card debt and want advice about the best options. Here's my situation: I have 3 mostly maxed out cards, $15000+ debt, 30% interest rates(I have made a few late payments so the rates skyrocketed). I am a graduate student and simply cannot afford $500+ monthly payments, especially when most of it is going toward interest! I have cut up my credit cards and am dealing with my emotional issues around finances. However, I need help with managing this debt, especially because I will be another $75000 in debt after completing grad school (but hopefully making $80000+ a year).

I would like any advice about how to best deal with the debt. I would like to pay it off in less than 5 years, which is next to impossible given my current interest rates. The creditors have refused to lower rates right now. Options I have considered:

--taking out a debt consolidation loan from Patelco credit union (I applied and am waiting for approval). Minimum interest rate is 16.05%

--credit counseling through Consumer Credit Counseling. Have not called yet. Wondering if people have used this service and found it helpful. Could I get better interest rates this way?

--taking out additional student loans at 8.5% and using the $ to pay off debt. sounds like a decent option, but it would mean i have more debt to repay after graduation.

Any advice on my situation and any of the aforementioned options is most welcome. don't want to be in debt forever!

I used CCC in my twenties because I had gotten into too much debt but it wasn't as high as yours. I made a payment to them and didn't use credit cards for at least five years until every penny was paid off. It was especially difficult because I got a job where I had to travel occasionally and had to either ask for a cash advance from the company or use my debit card. They did negotiate with the creditors and I made one payment. Eventually, I took over paying my creditors myself. Ten years later, I own a home, am pretty much consumer debt free and my credit rating is nearly perfect. So, the long term result was so worth it.

If you go to CCC you will not allowed to take on any more debt. It's a pledge you make to them.

If you take out the loan at 8.5%, that makes the most sense. However, you have to NOT GET INTO MORE DEBT. You'll be tempted to get a new credit card. If you take out that loan, pay off your debts and run up the cards again (which is verrrry likely statistically) you will be in even worse shape. Perhaps there's a financial advisor are someone even at the school who would be willing to act as your agent or counselor to prevent you from getting into more debt.

It can be done, but it's painful no matter how you slice it. credit cards are evil

Considering this situation in which you still need to continue borrowing money, but need to find lower interest rates, I'd strongly recommend a web site called PROSPER, which connects people who want to offer loans to those who need loans. The interest rates on prosper loans are much lower than what you'll end up paying the credit card companies, and you can get loans in any amount up to $25,000. I have been a lender and a borrower at Prosper for several months now, and based on my excellent experience with both, am delighted to give prosper my highest recommendation to anyone wishing to make loans and earn a very good return on their money, and to anyone needing a loan quickly (my money was in my bank account just two short weeks after I completed my online request). Prosper is something like eBay for banking... or a place where regular people can borrow and lend each other money. You can check it out at: Cynthia

If you have access to student loans that is absolutely the best way to go -- the interest rate is as low as or lower than anything else you could get, and you can defer the payments if you need to. Once you graduate there are various payment plans depending on your income. I wish I could get one! in debt too

''--taking out additional student loans at 8.5% and using the $ to pay off debt. sounds like a decent option, but it would mean i have more debt to repay after graduation.''

No, you'd have less debt after graduation. Taking on a new balance at 8.5% to pay off the same sized balance at 30% is not more debt, it's equal debt, and then every day that goes by it is less debt than you would have had, becuase the interest accumulating is lower.

I bet has good articles and calculators to help you make these decisions. C

I was in a very similar situation when I completed by BA. Even worse, I was falling behind on my payments. I would definitely recommend going the Consumer Credit Counseling route. It's been a while, so I can't remember if I used this exact group, but if not I used one very similar. They were able to lower, and in some cases completely get rid of, the interest rates on my cards. They then consolidated the payments into one monthly payment, based on what I was able to afford. In my case it took me about seven years to pay off my debt, but since I could afford the payments I never missed one. I stopped being stressed on a daily basis and the calls from creditors stopped! They also had me evaluate my monthly expenses and helped me make better choices in how I spent/saved my money. Most importantly, they got my credit back on track and I now have a very high credit rating again. LCM

In grad school with overwhelming credit card debt

April 2006

I could really use your financial advice. I am a 32 year old female single renter (don't own a home) with $40,000 credit card debt and over $100,000 in educational loan debt. I used the credit card to finance a non-accredited graduate program and to pay for food and an apartment while going to school full-time and working several years for 20 hours a week for free at a counseling center as part of my training. I actually did some extra work just to get by, but it was exhausting to work 80 hours a week between school, internship, and additional job. Most of the $100,000 came from interest on $80,000 in student loans from the doctoral program where I got my masters degree. My credit rating is excellent at 720 and I always pay my bills on time (even if it means borrowing from my 0% credit card), and all of my credit cards are at 0%, but it's a part-time job constantly managing them (about 12 different ones over 3 years). Now my major MBNA card has $30,000 and the 0% APR ends in December 2006. The debt is affecting my anxiety level and makes it hard to sleep. I wish I did things differently (no lectures please), but now it's too the point where I can barely manage to pay my bills. Also, I just finished my doctoral coursework and I'm beginning my dissertation, so it's not like I'm able to completely devote myself to working 80 hours a week, and even that is not likely to pay it all. What do you see as my options? Any creative ideas? Here's what I see: 1) bankruptcy (though I hope to one day marry and buy a house and have kids in the next 5 or so years) 2) Debt repayment service--often charge a high fee and take a long time to repay and typically affect my credit 3) someone suggested this here..find someone who can get a mortgage rate that is low and pay them off at a slightly higher rate than the mortgage? (I love this idea, but most of my friends are grad students and don't own a house). Thank you in advance for any ideas you might have. I am working, but earn about $25,000 a year right now as a counselor. Anonymous

I used to be ina similar situation and i followed Susy Orman's adivce. I also had an MBNA account and upon the end of the special rate period, I called and requested a lower rate than the ne I was supposed to swtich to in exchange for closing the account. So you won't be able to use it again, only make payments but you will know that your interest rate will never change again and stay at a reasnable level. The other trick is to figure out how much you can pay on your debt every months and make sure this is your focus. I did not buy anything for an entire year thatwasn't necessary...but i am debt free! Good are on the right track! M.

I can really relate to your situation as I have a similiar amount of debt between credit cards and student loans. Perhaps it's good to hear that you're not the only one (I know your posting gave me some comfort!). First off, if you haven't already, consolidate your loans be/c they're easier to track.

If any of your loans originated with the Ford Federal Student Loan program consolidate with them. They have an income contigent plan. Plus, if you pay consistently for 25 years, they absolve you of the remaining balance. Next, Consumer Credit Counseling Service out of San Francisco have helped me consolidate my credit card debt into one payment per month.

They can discuss with you what your options are and if the best solution for you would be bankruptcy or to consolidate. Their number is 1-800-777-7526. My experience of all the people I've talked with there has be a good one. They are helpful, non- judgemental, never condescending. Whatever you decide to do, it's a great weight off your shoulders just to tell someone everything about your finances. It can be tremendously freeing and is something most of us weren't raised to do. Also, check out Suze Orman's Young Fabulous and Broke. Advice may not be immediately helpful be/c of your limited income, but it's good for a laugh and you may find some passages that are easy to relate to. It's at the library. In a Similar Boat

You're in a huge financial hole--stop digging!!! Postpone the dissertation and devote yourself to working 80 hours a week, in whatever job(s) will maximize your income. You're right to be terrified by the looming mountain of debt you've been building up... so work on that, first. Now. First Things First

Dear anonymous, I would recommend talking to a bankruptcy lawyer. I filed a few years ago in a similar situation, before the laws changed, but I think it would be easy for you given your low income and high amount of debt. Like you, I had never missed a payment and had a good credit rating, but I was never going to get out of debt. I needed to think about the future ... sending my kids to college, saving for retirement, etc. A lawyer can advise you on all the details for your situation, Szabo was recommended to me and the consultation was free. Your educational debt will remain, but without the credit cards you can focus on making the payments. And you can start rebuilding your credit quickly. It's just not reasonable to expect yourself to make all those payments on the income you describe, I hope you at least look into bankruptcy as an option. anonymous and sleeping better

I've been there, and I completely know how you feel. When I was in college, I used my credit cards to eat out because I couldn't afford groceries. Obviously this was during a time when grocery stores didn't accept credit cards.

The fact that you have maintained such an excellent credit rating is great and shows that you are a good person really trying to manage life's priorities.

It is unclear from your posting if you have attempted to get a deferment on your school loans or if you are making payments while you're still completing your education. Regardless, I suggest you contact the lenders on your school loans and request a deferment if possible.

As for your credit situation, contact Consumer Credit Counselors. When I used them, they were a non-profit that accepted donations based upon my ability to pay. They call your creditors and worked out an arrangement. You pay CCC one check and they send the payments to your creditors. Of course, you have to stop using your credit cards.

As for bankruptcy, the laws have changed, and as a result are less consumer friendly, so you should continue to avoid that as an options. With regards to the ''mortgage'' idea, I'm not sure I understand the mechanics of that one. Suffice it to say, you can dig from under this and do well. One of the best investments you can make next to buying a home is getting a college education (with an advance degree to boot!).

Finally, as strange as this may sound, I suggest you set a small amount money aside each pay period, regardles of the amount of debt you may have. Getting into this habit will benefit you tremendously once you've completed your studies and your debt is gone.

Everything will work out and I wish you continued success with your studies!! FP

Hi My situtation was different but yet similar and I got through it all. I came out of a divorce 8 years ago with no job, no job history (I just graduated with a BA), and lots and lots of credit card debt, including a student loan. I went to Consumer Credit Counseling of the East Bay. We figured out a monthly payment that I could afford, and believe me, it was very little.

I gave them all my credit cards, they negotiated lower interest rates with my creditors and I had to promise not to open another credit card account until everything was paid off. I used my Visa Debit card for many years. It took me 7 years to pay it all off but it feels great. The only word of advise I want to give you is make sure they do not report it to the credit companies, meaning Equifax and the likes, that you are in debt management. I wanted to buy a house and when lenders heard I was in Debt Management, no one wanted to even talk to me. They said that if this is on your credit report, it is the kiss of death and worse than a bankrupcy. The funny thing is that mine never showed up on my credit report, so I was extremely lucky. Last year I bought a small condo because my credit score was very high, it sounds like yours too, so try to keep it that way. good luck, and below is the link debt free after many years

Know of a good credit counseling agency?

Jan 2007

Does anyone know of a good credit counseling agency in the bay area - in, or around Berkeley? Going through a divorce and need some help getting out of debt. Financially Challenged

This is an easy one: Consumer Credit Counseling Service of San Francisco. They are the only Non-Profit credit counseling agency. Go nowhere else. Angela

Fixing credit rating

March 2004

I've looked in the archives but don't see this. Anyone have an agency (preferably nonprofit) that can help me clear up my credit rating? Thanks very much. Financially Clueless

Hi, There is a wonderful book that helps you to clean up your credit yourself. It is called Guaranteed Credit and it is by Arnold S. Goldstein. You may have to get a used copy on Amazon or something because I'm not sure if it is in print anymore. I used this book and my credit went from awful to almost perfect in the space of a couple of years. Been There!!

Around eigth years ago, my family had great success with a non- profit organization called CCCS, Consumer Credit Counseling Service. You might want to give it a shot. Good luck! Happy Customer

Consolidate to reduce credit card debt?

Dec 2003

We have about $30,000 in credit card debt that we would like to pay off without taking out a second on our home. Has anyone had any great experience with an individual or firm that renegotiates balances? We prefer to write our own checks to banks and not pay a firm to consolidate. We assume Credit Counselling Center (?) (CCC) does the latter. Eagerly awaiting responses

I found working with my credit union on a debt consolidation plan was a better option than renegotiating. My credit union paid off the balances and then I pay the credit union a loan repayment at a much lower rate, lower than any rate that could have been renegotiated. And in my opinion, renegotiating basically gives you the option of making lower monthly payments and keeping you further away from paying off the balance. And as far a credit score goes, I now have no credit cards with a huge balance and one reasonable loan that is paid each month. I guess it is also important to make sure that the circumstances that caused the debt in the first place are taken care. anon

Try James Pixton, attorney in Alameda. Phone number in phone book, I'm sure. Susan

I have heard that the credit counseling organizations -- even ''non-profit'' ones will RUIN your credit. I have read a book by Dave Ramsey and he gives frank advice on how to get out of debt. (Beans n Rice, Rice n Beans for dinner; make a budget; create monthly cash envelopes to pay bills and when the $ is gone; well, tighten even more.) His advice on paying off credit cards is basic but if you can take his hard edge and sometimes quirky manners it will work... Visit Good Luck working on it too!!!

I have never used a credit consolidating service, but I am writing to HIGHLY encourage you to pay off your credit card debt immediately and in any way you can. You are paying 18-20% interest on your credit card (maybe more depending on how the card is structured). There is no more expensive loan in the world. If you took out a second mortgage, what is the MOST it could cost you even with points 10%??? You will save 8-10% immediately. Pay it off and then cut the card up. Leslie

Credit repair service to fix errors on credit report?

March 2003

My husband and I have a number of errors on our credit reports, including an infuriating mistake on the part of Discover Financial Svcs, that has significantly lowered our credit ratings. We do not have time to deal with the credit bureaus or Discover on this any further, and are considering using a credit repair service such as Credit Justice Inc. or LexingtonLaw (both on the web). Has anyone used one of these or know whether they get results, or are they just a scam? Can you recommend an alternative? Thank you! Too busy to deal

I've worked with Consumer Credit Counseling Service of the East Bay to resolve issues like yours. They are a non-profit organization and offer a lot of free and low cost services. Their main office is in Oakland on Hegenberger Rd - 729-6966 Steve

I have no personal familiarity with either of the credit repair services you mention. I am, however, an attorney who practices in the area of consumer law. It is my general impression that there is a lot of abuse in the so-called credit repair industry, and that much of what these companies purport to offer, for a fee, can and should be done by consumers themselves. It is also my impression that credit repair companies are often targeted at persons who actually have bad credit, i.e., the negative information on their report is correct, and the companies advise how to ''repair'' that damage. If there is inaccurate information on your credit report, however, you have a legal right to challenge it, and both the provider of the information and the credit reporting company have a legal obligation to investigate and to verify the information and/or to correct the error. If they fail to do so, you can bring a lawsuit against them, and if you prevail, would have a right to collect your attorneys' fees. Short of that, you can write to the credit reporting agency, and even if they claim to have verified the information, they have an obligation to print ''dispute'' langauge on the report that you submit. All of that, of course, takes time on your part. If do not want to spend the time, you might want to consider hiring an attorney, either on contingency or just for a couple hours of time. If a credit repair company does not have attorneys on staff, I do not see how they can purport to act on your behalf. Nor do I see how they would be any more effective than you are acting as your own advocate. An attorney, however, particularly one with the appropriate expertise, could very quickly assess your situation, communicate with the credit reporting agency, and either trigger prompt corrective action or represent you in further legal action. Again, I have no personal knowlege of the particular companies you mentioned, but I would be suspicious.

Have you tried Consumer Credit Counseling's Debt Management Program?

January 2003

Has anyone ever tried Consumer Credit Counseling's Debt Management Program? I have two large balances that I want to consolidate. Any comments helpful. Thanks. cd

I don't think it's ever a good idea unless you're really in financial straits, since they usually cost more money in the long run. Remember that most debt consolidation plans offer a ''lower monthly payment''--at a higher rate! So the longer you borrow money, the more you will have to repay. And if you transfer your balances to a debt consolidation program, it may be tempting to spend more since you'll be paying less on the bill each month! The best debt management program is 1) to take control of your finances 2) transfer all your balances to the lowest possible rate, and 3) pay them off ASAP. Even if your debts will take years to pay off, pay them off at the lowest rate so that more of you money will go to the balance, rather than to some bank or credit company! anon.

I have been with CCC of the East Bay since 1998. They have been instrumental in re-negotiating interest rates with my various creditors. I pay a monthly amount which CCC distributes to the creditors. When you sign-up, you can no longer acquire another credit card or other kind of debt instrument until your entire debt is paid-off. Not having any kind of credit card for emergencies is challenging at times, but at least you do not accumulate any more debt. It will be another couple of years until I am completely debt-free, but I am well on my way. I would highly recommend it to anyone. almost debt-free

Should I consolidate my student loans?

July 2002

I was wondering if anyone out there had any advice or recommendations on consolidating my student loans??? We are expecting a new baby soon and I'm deperately trying to find little ways to reduce our monthly bills. I recently received info from the Dept. of Education on this, but when they consoilate they take the adverage of the interest rates of all your loans. This is currently around 7.5%. I was hoping to find a lower interest rate than that, but also find a lender that I can trust. Any recomendations for lenders or ways to get information on this subject would be GREATLY appreciated! Anna

Loan consolidation is a great idea if you can't pay your bills right now. BUT of course in the long run you will pay much more because you are spreading out your loans over a longer time and therefore paying more interest. So if you do it, try to start paying down the principal with extra payments as soon as you can. Also, you didn't ask about this, but it's never a good idea to consolidate loans with your spouse because in case of death or divorce, you would be responsible for the whole joint loan instead of just your own. Sorry to bring up the worst case scenarios, but... Deborah

I recently consolidated my loans with CFS (Collegiate Funding Services) for about 5.5%, and they take off another .25% if you pay by automatic withdrawal from your bank account. I found them very easy to work with, as they were more than happy to take my very large loan amount away from Citibank (and I was more than happy to give it to them). They can be raached at 888-423-7562 and they also have a website Tara