Debt Management, Credit Counseling & Pre-Bankruptcy FAQs
Q: What services do you offer?
A: As a credit-counseling organization, we provide a wide array of programs and services related to credit and debt. We offer credit-counseling sessions, debt management plans, housing counseling, and pre-bankruptcy counseling, including certificate issuance.
Q: What is the difference between a for-profit and not-for-profit organization?
A: A for-profit organization is just a regular business or corporation. A not-for-profit organization is a corporation that has elected not-for-profit tax status from the Internal Revenue Service. We are a 501(c)(3) not-for-profit organization. The reason this is important is because your creditors only work with not-for-profit organizations.
Q: How do you make money?
A: As a not-for-profit organization, we are funded mainly from contributions. We also receive funding from various credit-granting institutions.
Q: What's the difference between credit counseling and debt management?
A: Credit-counseling and debt management are two terms used frequently, but do not necessarily mean the same thing. Credit-counseling is an umbrella term where a certified credit-counselor will review your financial situation and provide options and solutions. Debt management or a debt management plan is a program that we offer that allows you to pay back your debts at a reduced monthy payment/reduced interest program.
Q: Are your counselors certified? Does this really make a difference?
A: Yes. All of our credit-counselors are certified by the National Association of Certified Credit Counselors. This is very important because in order to be certified, a counselor must undergo rigorous training and re-training in order to keep on top of credit and debt issues.
Q: What education programs do you offer?
A: Part of our ongoing commitment to our clients, we provide free educational news articles/newsletters, FDIC Money Smart CD ROMs (available both in English and Spanish) ? "Out of Hock & Out of Debt" by Harry Dahlstrom, and "Credit when Credit is Due" curriculu by Paul Strassels.
Part of our ongoing commitment to the community, we provide free credit counseing workshops at local organizations. Free handouts and literature are availabe to all attendees. Please call us at 800-383-8349 to schedule a workshop.
Debt Management Program FAQs
Q: If I enter into a DMP, can I continue to use my cards?
A: No. If you enter into a DMP, any card placed on the program will be closed. Your creditors reason that if you are to receive reduce monthly payments and interest, you have to be dedicated to paying your bills back. This is really for your benefit. By closing your account, you are taking an important step to getting back on your financial feet.
Q: If I enter into a DMP, is my money secure with you?
A: Yes. When you utilize our organization for a DMP you can be assured that your funds are safe and safe-guarded. We are bonded.
Q: If I enter into a DMP, do I receive statements from my creditors?
A: Yes. You still receive statements from your creditors indicating that payments are being posted to your account as well as seeing for yourself the benefits you are receiving. You can also access your account information on this website.
Q: If I enter into a DMP, do you send me a statement?
A: Yes. We send out regular statements to all clients. This indicates that your funds have posted our accounts and have been disbursed. However, the best indication of payment is from from your regular monthy statement from each creditor.
Q: What are the fees involved?
A: If you enter into a DMP, there is an intial voluntary contribution, plus a monthy contribution. As a not-for-profit organization we rely on these small contributions to provide low cost services to you and the public.
Q: If I enter into a debt management program, or a DMP, will that affect my credit?
A: This is the most frequently asked question that we encounter. And the correct answer is ? " It depends". Some lenders view credit counseling as an encouraging sign that you are getting your debts under control. If you have poor credit when entering a DMP, your credit rating will actually IMPROVE after the first year of consistent payments. Being reported as late or delinquent can certainly hurt your credit score. Some lenders even view credit counseling as an encouraging sign that you are getting your debts under control.
If you have good credit, then it could be considered a negative. BUT, good credit does not necessarily mean that you are current on your bills. All lenders look at your entire credit file. Factors that they consider are: how much you make, how much you owe, payment history, etc. One of the most important factors of your credit file is the debt to income ratio. If you are simply making minimum payments, you may have a high debt to income ratio, which lenders may consider negative. Some lenders may even recommend that you undergo a DMP to pay down your bills before they grant you a mortgage or even an unsecured loan. The credit score formula utilized by most lenders, FICO, ignores any reference to credit counseling that may be in your files. Ultimately, our debt management plans can only help you. Offering you lower finance charges to achieve debt reduction more rapidly, thereby improving your primary credit score factor.