If creditors are looming and you’re barely making the minimum payments on your credit cards, it might be time to seek professional help.

What to Look for in a Credit Counseling Service

  • Find a reputable non-profit agency. The best place to start would be the National Foundation for Credit Counseling. They can refer you to a member organization near you.
  • Ask questions before you sign up for anything. Don’t even meet with a counselor until you find out exactly what the fees will entail. Usually a counselor will sit down with you and go over your short- and long-term goals including quick cash borrowing. Come prepared with pay stubs, bills, anything that will help the counselor get a clear picture of your financial health. If he/she suggests you enter a debt management plan, you’ll be charged a fee that will be separate from your bill payments. The agency will negotiate with creditors on your behalf and are usually able to lower interest payments, reduce or eliminate late fees and over-the-limit charges. You then make one payment to the counseling service and they in turn pay all your creditors.

Is it Possible to Negotiate with Creditors without the Help of a Credit Counseling Service?

Yes. In fact you should try to do that before you seek a counselor’s help. Really, there’s nothing that a counseling service can do that you can’t on your own. They may have more clout with creditors, but if you enter into a debt management plan, you will have to close your credit card accounts. If you negotiate on your own, you might be able to keep the accounts open.

Tips on Negotiating with Creditors

Have a specific plan in mind before you get on the phone. Propose a payment plan you can live with and ask the representative to reduce your interest charges. If you are getting nowhere with the person on the phone, ask to speak with a manager. Be polite but firm. Explain your situation and the steps you are willing to take to pay off your debt. Try to get your interest payments reduced as much as possible, along with late fees and over-the-limit charges. Remember, it is in their best interest to come to terms with you and start getting paid.