What credit counselors can do

Usually, credit counselors can stop late fees and other penalty charges, reduce or stop interest charges, lower the required monthly payments and re-age accounts to bring them current. Once enrolled, correspondence from creditors regarding past due accounts are directed to the credit counselors. It puts an end to upsetting collection calls.

In analyzing an applicant's financial profile, credit counselors determine if there is sufficient income to sustain an acceptable budget based on a "revised" payment plan. Should a qualified applicant enroll, credit counselors can set up a conditional budget which accommodates all of the applicant's creditors. Only unsecured debts, however, are placed in debt management programs. Credit counselors do not contact secured creditors, utilities, or insurance companies. However, these expenditures are accounted for in determining an acceptable budget. This budget includes a "fixed monthly consolidated payment" to cover accounts placed in the debt management program. Upon enrollment, based on this budget and our experience negotiating with creditors, the credit counselors draft and mail proposals to each creditor placed in the program. These counseling organizations usually have established relationships with the different credit companies and banks and can negotiate on your behalf.

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