gua: Consumer Credit Counseling can help you get out of debt

Ken Cook, a Consumer Credit counselor, gives advice to a potential client.

AIDA MALLARD/Special to the Guardian
Published: Thursday, January 14, 2010 at 6:01 a.m.
Last Modified: Wednesday, January 13, 2010 at 7:54 p.m.

With many credit cards companies raising interest rates to levels akin to those charged by loan sharks, many people are drowning in debt.

But life lines are available to help consumers get out of debt and back into financial stability through Consumer Credit Counseling Service of Mid-Florida Inc, a not-for-profit corporation that provides professional credit and budget counseling, debt management, and education.

Ken Cook, a credit counselor at Consumer Credit, said credit card companies appear receptive to working with card holders and making some concessions, including lowering interest rates and waiving over-the-limit and late fees.

He said a reasonable repayment interest rate would be 6 percent to 9 percent of the balance owed. "In this economy, the need has grown," said Cook, "and creditors seem receptive to working with clients."

Through their debt repayment program, Cook said counselors work with clients and creditors to develop a plan to help clients get out of debt and back on their feet. He said the program is two-fold because it also helps creditors get the money owed to them.

Cook recommends taking advantage of the free credit and budget counseling program before pursuing a debt repayment plan. A $20 one-time fee is charged for setting up a repayment plan, and the monthly amount paid to each creditor is a percentage of the balance owed.

In addition, the client must pay a $20 fee each month payments are collected and distributed to the creditor.

"We look at the client's net income to determine a debt repayment plan," said Cook. "The amount of the monthly payment is not based on what the client can afford, but on how much the creditor will accept."

To set up a repayment plan, clients must decide which credit cards to enter into a repayment plan and provide financial information, such as income and expenses.

Cook said counseling and repayment plan can be done by telephone or in person, but an appointment is required.

For those wanting to work out a repayment plan on their own, Cook said call creditors and ask to speak to a supervisor in the hardship department.

Cook said there are at least 39 items that impact credit scores, but the main ones are credit card balances close to the credit card limit, too many new credit card accounts or too many credit card inquiries, credit cards opened for a short time and the length of time it takes to pay off balances.

Judy Collins, director of education and public relations at Consumer Credit Services of Mid-Florida, stressed the need for setting up a budget and sticking to it. "So many people don't have a budget and are not aware of where they stand financially," said Collins. "People need to know they have the money before they spend it."

Collins recommended scrutinizing statements from creditors to ensure charges are valid and to look at interest rates. "When people get an inkling things are going wrong," said Collins, "it's better to get help before the situation gets really bad."

Other services available at Consumer Credit Services of Mid-Florida include financial literacy education and credit report review to learn what is lowering a credit score and how to improve it.

A credit report review costs $20 for clients who provide their own credit report; otherwise it is $30.

For more information, call 352-371-2227. To make an appointment to meet with a credit counselor, call 800-245-1865.

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