If you’re buried in credit card debt and can’t make your payments, you may have wondered if you should tap a credit counseling service. And you may well need one.
But what you may not realize is that these days, credit counseling services do far more than help consumers with credit card bills. In recent years, the scope of their offering has expanded and evolved. If you have a money problem, chances are, a credit counseling service can help you.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
That doesn’t mean you should drop everything and seek one out automatically. While credit counseling services are nonprofits, they do charge money for many of their offerings, although your first introductory meeting should be free. What’s more, not every credit counseling service is on the up and up. Generally, a good rule of thumb is to find out whether the service you’re eyeing is a member of the National Foundation for Credit Counseling, or NFCC, or the Association of Independent Consumer Credit Counseling Agencies, or AICCCA.
In any case, if you feel you need help with your finances, these are some of the services credit counselors frequently offer — beyond helping you whittle down your credit card debt.
Student loan counseling. According to Edvisors.com, which offers information about college financial aid, on average, each member of the class of 2015 graduated with $35,051 in student debt. That may not be so bad if you land a well-paying job, but that could really weigh you down if you don’t. Which is how many credit counseling services have come to include student loan counseling as one of their offerings.
Sara Ruiz is the student loan director at Take Charge America, an NFCC member, and while she can’t speak for all credit counseling services, she says that in TCA’s case, student loan counselors will review each client’s specific student loan scenario and provide an unbiased recommendation on how to best repay the loans.
“It is hard to ask the right questions or push back on a servicer when you don’t know anything about the process,” Ruiz says.
And their clients arguably need help. “The typical client with Take Charge America has a little more than $67,000 in federal student loans,” she says.
So how much does it cost to get help for your student loans? At Take Charge America, it’s $49 for standard counseling and it’s $250 for premium counseling, where you get more hands-on help, like having a Take Charge America representative on the phone with you when you talk to your loan servicer.
“Fees cover administrative costs,” Ruiz says. And, of course, if the service brings down the money you owe, in the long run, you’ll likely save far more than $49 or even $250.
[See: 10 Easy Ways to Pay Off Debt.]
Help for the bank-less. Were you kicked out of your bank a long time ago and barred from joining another one? Then you’re probably on a list run by ChexSystems, a Woodbury, Minnesota-based business that compiles a report of banking customers who owe a significant amount of money to banks. Get on the report, and it becomes very hard to find a bank willing to accept you as a customer.
But you may be able to get back into a bank’s good graces if you participate in a two-hour course like Checkwise, offered at ClearPoint Credit Counseling Solutions, an NFCC member with locations in 15 states and the District of Columbia.
“Once you take the online CheckWise course, you will receive a certificate of completion, which can be printed and taken to a participating financial institution,” says Thomas Nitzsche, a spokesman for ClearPoint.
While that may not be enough for a bank, many ClearPoint clients have had luck re-entering a bank by completing the course, he says. Nitzsche recommends checking with whatever bank you’re considering joining and asking if you would be accepted before taking one of these courses. The cost of the ClearPoint course is $25.
Financial coaching. You could argue that all a credit counseling service does is offer financial coaching, but the field has become much more specialized than it used to be. Many credit counseling services offer free financial advice to members of the military, some of whom historically have had trouble adjusting their finances to the civilian world. There are programs for the Hispanic community, and many nonprofits have homeownership education programs, post-bankruptcy programs and even programs to help children become more financially savvy.
Nitzsche says ClearPoint offers a coaching program called My Financial Blueprint, which is designed to help low- to middle-income clients reach their financial goals.
[See: 10 Money Leaks to Shut Down Now.]
It’s free, but only because employers pay for the service as a benefit to their employees.
Getting a loan modification on your house? “We provide outreach and support to homeowners who have received a mortgage modification from their lender. The goal is to ensure their modification is successful and that homeownership is sustained long term,” Nitzsche says.
What most people who come to a credit counseling service have in common is that they “are financially fragile in some way, either due to credit card debt or student loan debt, or they’re having trouble making payments on their house. They feel financially trapped, and they’re looking for options and solutions,” says Melinda Opperman, a spokeswoman for Springboard Nonprofit Consumer Credit Management, Inc., a credit counseling company that has 10 locations in eight states nationwide.
She says it’s a myth that just because you come to see a credit counseling service, you’ll be automatically steered to a debt-management program. It may happen, but if you’re only several hundred dollars behind, it’s more likely, she says, that you’ll be offered advice on how to get yourself out of the hole.
Much of the advice is free; plenty isn’t, but as a general rule, Opperman says, the best credit card counseling services offer fees that are “low or nominal. The cost is governed by state guidelines and industry best practices.”
And she says that in some hardship cases, the fees may be waived.
But one thing is certain: If you’re considering tapping a credit counseling service, that’s probably a sign that you should do it.
“One of things we learned from the housing crisis during the recession is that a lot of people said that they wished they had known about us sooner rather than later,” Opperman says.
In other words, if you fear you’re financially in over your head, and you’re mulling over the idea of going to a credit counseling service, now’s the time. You probably don’t want to discover what might happen if you wait until later.
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Beyond Debt: 3 Other Ways Credit Counselors Can Help Consumers originally appeared on usnews.com
