Questions About Debt Management?
- Why Family Credit Management?
- What does Family Credit Management do?
- What is the Debt Management Program?
- What about debt settlement?
- How is debt management different from filing bankruptcy?
- How long will it take to pay off my debt?
- What about the high interest rates and fees on my cards?
- Can I still use my credit cards?
- Can't I do this on my own?
- Should I get a loan instead of using debt management services?
- What if I am past due on my accounts?
- My accounts are paid on time but I am struggling and my balances aren't going down. Can you still help?
- Will I continue to get calls and collection letters from my creditors?
- Is this confidential?
- What kind of creditors do you work with?
- How will this affect my credit?
- What are your fees?
- When do I pay you?
- When will you contact my creditors?
- If my creditors call, should I tell them about my plans to enroll in your program?
- What happens once I enroll?
- How will I know when my creditors have agreed to the plan?
- How will I know where my payments are going?
- Can I add an account once my debt management plan has started?
- Can I pay more/extra if possible?
- What happens if I miss a payment?
- What if I win the lottery (yea!) or lose my job (boo!) and want to discontinue your program?
- What happens once I complete the program?
- What if I'm still not sure?
- My question is not here.
Why Family Credit Management?
Because we have been helping consumers deal with debt for over 20 years. We are licensed and able to serve consumers throughout the country. All client funds are held in dedicated trust accounts and we undergo regular exams from many of the state banking departments. We are longtime members of the Better Business Bureau with an A+ record. We are ISO certified and undergo yearly exams from them. Take a look at: https://www.facebook.com/FamilyCreditManagement where you can see pictures of our offices and staff.
As one of the largest Debt Management organizations in the nation, we offer multiple client payment options: pay by phone, mail, on our website, or have your payment automatically deducted from your checking or savings account. We can email your monthly statements and as a client, you will have 24/7 online access to your account information.
More important than all of this, our people really care. When you talk with us you will know right away you are a person, not some random number. Our counselors never use scripts, instead taking the time to listen to your specific situation and needs and work to give you real options that are the best fit for you. Many of our people have been in the same situation you are and we have worked with hundreds of thousands of consumers dealing with the very same situations you are. Read some of our client reviews on our www.familycredit.org/reviews or our www.facebook.com/familycreditmanagement.
What does Family Credit Management do?
We work with families and individuals who are struggling with debt. For some of our clients this may mean a couple payday loans or collection agencies with a total of $3,000 in debt, for others it means $200,000 in credit card debt. Some of our clients are current on their debt but living paycheck to paycheck others are being sued or facing garnishments. Most are somewhere in between. We have worked with over 70,000 creditors across the country. We ask them to reduce or eliminate interest, stop any fees they are adding, stop any collection activity, phone calls, if applicable, etc.
What is the Debt Management Program?
The Debt Management Program is a debt consolidation (or credit counseling) plan. It’s a comprehensive and straightforward way to get out of debt that, when done right, won’t destroy your credit like debt settlement or bankruptcy can. When you enroll in our program, we negotiate with your creditors to lower interest rates and stop late and over-limit fees so that you can focus more of your dollars on repaying the actual debt.
Our certified credit counselors will work with you to establish a monthly budget and set up a payment plan with your creditors that fits within that budget and is acceptable to them. Rather than making payments to several different accounts every month, you make just one to us and we pay your creditors. With credit counseling you end up paying less (because of lowered interest and less fees) and it’s a convenient once or twice monthly payment for all of your unsecured debts.
What about debt settlement?
If you've watched TV or listened to the radio in the past several years, you've likely seen or heard countless commercials for debt settlement. Debt Settlement is a newer way of approaching debt, but unfortunately it usually does more harm than good.
Instead of making monthly payments to your creditors, debt settlement agencies hold your money until they have a large enough amount to offer a settlement (hoping the creditors will be desperate enough to take it at that point.) If your accounts are already charged off and older this may be a viable option. If you have crazy high interest loans, finance companies and payday lenders, this may be the only way to get out of them. Unfortunately, debt settlement companies treat all debt the same-and settlement is not a good choice for most debt.
In extreme cases we too will often suggest a client considers settling on a debt. This will only be done if we feel this is the best option and only with your understanding the pros and cons of this approach.
How is debt management different from filing bankruptcy?
Bankruptcy exists for a reason and for many consumers, especially those facing crushing wage garnishments; it very well may be the best solution. But it is not as easy as the slick attorneys on TV want you to think. When you file for bankruptcy, it means you are going to court with your creditors, thereby destroying your credit. Filing for bankruptcy makes it far more expensive, if not impossible, to buy a house or car, get a loan and maybe even obtain a job for several years. Bankruptcy can be a complete discharge of debt or a court ordered partial repayment. Either way you will have to answer the question “Have you ever filed bankruptcy?” with a YES.
With credit counseling, you repay your creditors in full over time, usually with reduced interest and fees- terms they agree to.
How long will it take to pay off my debt?
Debt repayment varies greatly from client to client. However, because we are usually able to reduce high interest rates, clients are often able to pay back their debt in an average time frame of five years from the start of their program. Your credit counselor will provide you with an estimated repayment date and our client services department can provide you with an updated payoff date at any time.
What about the high interest rates and fees on my cards?
Once they begin receiving payments through our program, many of your creditors will stop charging late/over limit fees and reduce the interest rate they are charging you. For consumers unable to dig their way out of debt, interest is usually the culprit. By obtaining lower interest rates many of our clients save thousands of dollars and shave years off their debt repayment. Each creditor has their own policy for working with us and your credit counselor can discuss the benefits your specific creditors traditionally provide.
Can I still use my credit cards?
You can’t get out of debt while you’re getting into it. We tell the creditors you want to get out of debt and ask them to help with reduced interest and fees and payments. We promise them you are serious and will take on new debt. In reality it’s not good for your financial health and not fair to the creditors on the plan for you to pay their competitors full interest while they are giving you a break. If you need to keep one off for emergencies or other bona fide reasons please discuss this with your credit counselor.
Can't I do this on my own?
In order for a creditor to agree to make concessions, they must feel that the client is truly committed to repaying their debt. They also want to know that a client’s other creditors (their direct competitors) won’t continue receiving normal, higher interest while they are granting lower rates and reduced fees.
The solution to both of these issues is for the consumer to enroll in a debt management program. Family Credit Management has a wonderful track record of helping people become debt free, so creditors take our clients seriously because they are working with us. Your creditors would much rather work with us than turn the account over to a collection agency, attorney, or lose you to bankruptcy.
Should I get a loan instead of using debt management services?
Probably not. Loans are what got you into trouble in the first place. Most unsecured loans have high interest rates, and if you get a home equity loan, you are simply securing your credit cards with your home. That’s very dangerous! You can't borrow your way out of debt. You must face the debt you have and get rid of it whether it’s through us or on your own. Don’t take on any more of that four letter word: D-E-B-T! If however you have excellent credit and not a huge amount of debt you may want to consider a consolidation loan. Make sure the interest rate for the new loan is lower than the average rate on our program. Most importantly be certain not to use the credit cards you pay off. The biggest problem we see with clients who obtain a loan is far too often several months later, despite the best of intentions, they have a consolidation loan on top of credit cards that have been used once again making repayment that much more challenging.
What if I am past due on my accounts?
That is no problem at all. Creditors just want to be paid. Most creditors will bring your accounts current, stop late and over limit fees, stop collection calls and reduce or eliminate interest. This being said, the more proactive you are the better. Waiting until accounts get further and further behind only makes things harder.
My accounts are paid on time but I am struggling and my balances aren't going down. Can you still help?
Yes! High interest rates are the real killer. By getting your creditors to reduce their high interest and fees, more of your monthly payment goes to reducing your debt and you can become debt free years quicker than you would on your own.
Will I continue to get calls and collection letters from my creditors?
Most creditors will stop collection activity once they receive the first payment from Family Credit. You should continue to receive monthly statements from most creditors allowing you to see the progress you are making on paying off your debt first-hand. If you ever receive any scary letters be certain to provide them to us right away. If creditors are calling you let us know we have some tools at our disposal to get them to stop.
Is this confidential?
Absolutely. Our respect for your privacy is one of the reasons so many people choose us and refer others to Family Credit Management. We never have and never will sell, rent or give your name or address to any party for any promotional reason. At your request, we can even use unmarked envelopes for mailings to your home.
What kind of creditors do you work with?
We work with almost any unsecured creditor (unsecured simply means nothing they can come and take like your home, car, etc.). While the vast majority of our clients are dealing with credit cards, we can also include personal loans, collection agencies, pay day loans, medical or veterinary bills, and many more in your debt consolidation plan. We have even worked with funeral homes, auto mechanics, and clients' family members.
How will this affect my credit?
This is a difficult question to answer because there are so many components to your credit report and it depends on how high or low your score is today. In the very beginning of enrolling in consolidation all of your unsecured available credit lines should be closed so you cannot make your debt situation worse. This may cause your credit score to initially go down. Keep in mind, what really matters is whether your credit report shows responsible use and repayment of credit and debt, and what steps can you take today to reflect this in the future? The bottom line is once you complete the program and if payments were made to us on time you will be debt free with a solid repayment history. This is the most important thing to future lenders.
Most people are concerned with their credit score and want to know how they can make it higher. That is a tricky question. There are over 49 distinct FICO scores alone and the formula for each one is changed frequently. The reason for this is: what may be important to an insurance company is not at all important to a utility company, so they weigh parts unequally. We believe the key is to manage your debt responsibly and follow a few simple rules: don’t overuse credit, pay your creditors back as agreed, don't apply for unnecessary credit, etc. By doing these things your credit score will properly reflect who you are regardless of which score is used or how they change the formulas for calculating your score in the future. There is no magic bullet, no quick fix.
What are your fees?
Our budgeting sessions, reviewing your credit report, educational books and tools, and presentations are always free. We receive about half of our funding from the credit granting community, however, like many non-profit organizations (hospitals, credit unions, churches), we have many expenses (offices, payroll, computer systems, insurance, etc.) and therefore we receive financial support from the people we serve as well. Our fees are based on a sliding scale and there is never any charge unless you enroll in our Debt Management Program. Unlike some other credit counseling agencies, we have no hidden charges, there is a one-time account set up fee which averages $40 to help cover the cost of establishing your account and a monthly account administration fee which is on average $30 a month. However, you may be eligible for reduced or waived fees. We never allow our fees to get in the way of helping you.
When do I pay you?
You choose a due date with your credit counselor that best fits into your monthly budget and schedule. You can even split your payment in half and pay twice a month. Some clients even pay us weekly. Allowing you to select your due date(s) is one great way to help ensure your success on the program and something that many other agencies do not offer.
When will you contact my creditors?
We will not talk to your creditors unless you choose to enroll in our debt management program. Once you have enrolled we will contact them based, in part, on the specific creditors you have. Many want a payment proposal from us once you have signed our client agreement, others prefer we wait until your first payment is received, to make sure you are serious. If legal threats are imminent make sure your Credit Counselor is aware as we may need to contact your creditors more quickly than usual.
If my creditors call, should I tell them about my plans to enroll in your program?
Yes, any creditors who contact you should be advised of your plans. Major creditors are usually supportive. If your accounts are with more difficult creditors like collection agencies or payday lenders they will often attempt to get money directly from you at any chance they get. If this happens, contact our client services department with any details.
What happens once I enroll?
Once your counselor completes your file, our data entry department will set your account up in our system and online. They will send you a Client ID card, statement, and new client welcome packet full of information to ensure your success and understanding of the program. Our accounting department will prepare your Auto-Pay, if you are enrolled. Our client services team will review your file and notify creditors of your enrollment at the appropriate time dependent on your specific creditors guidelines.
Many creditors will send you acknowledgement of their acceptance of the proposed plan. Most creditors will send you monthly statements, and so will we. Your counselor or client services representative will contact you in about 45-60 days after your first payment to discuss the plan’s progress and answer any questions. Of course, you are always welcome to call us before this time if any questions arise.
How will I know when my creditors have agreed to the plan?
Most of your creditors will mail you a letter confirming our new repayment terms, interest rate, etc. If they don’t they should continue to send you monthly statements which will reflect our payments being received by them as well as any updated terms.
How will I know where my payments are going?
At the end of every month, you will receive a detailed statement which summarizes the payments made to each of your creditors either by email or postal service. You can also view your monthly statement online. All creditors that currently forward you regular monthly statements should continue to do so after enrollment, allowing you to monitor your progress from their perspective as well.
Can I add an account once my debt management plan has started?
Yes. We have many clients who find themselves with a medical or collection debt (either brand new or long forgotten about) rearing its head again. Some of our clients even get more credit cards once enrolled (a no no, but some do it anyway). Email/fax/mail a copy to our client services department and they will add it to your account, review your household budget again (depending on how long since your last one was done) and discuss any payment increase required.
Can I pay more/extra if possible?
Yes! Our objective is to assist you in becoming debt free as soon as you can. Many of our clients contact us at tax time and want to make an extra payment. Others may increase their payment to reduce the length of time on the program as their finances improve. We strongly encourage this- once you have built a little emergency savings, of course. Family Credit has never charged any fees for clients to pay extra towards their debt.
What happens if I miss a payment?
Regular monthly payments are critical for continued creditor concessions, and your credit. However, we and most of your creditors understand life can happen. Many creditors will even allow one missed payment during the life of your program. Some will allow two, yet others do not allow any payments to be missed. If you find yourself unable to make your entire Debt Management payment, call, email, or chat online our client services department immediately. They will be able to work with you and try to find a solution.
What if I win the lottery (yea!) or lose my job (boo!) and want to discontinue your program?
That is no problem! You are only enrolled in our program for as long as you want to be. While we trust you will be pleased and remain on the program until you are debt free, you may terminate the plan at any time for any reason with no penalties whatsoever. If you did find yourself with reduced income be certain to talk with us before just dropping out. If it is temporary we can review your account and determine which creditors traditionally are more aggressive and which are more lenient. We then may suggest prioritizing creditors if you are able.
What happens once I complete the program?
Once our records indicate you have completed the program, we attempt to verify all balances are paid in full (we recommend you do the same and keep any final creditor statements for your records.) We will also mail you our Client Graduation Package which provides a passageway to financial independence. Included in this package is a certificate entitling you to a free telephone conference with any member of our management team (including our President, who is also a college professor of Personal Finance) to answer your questions and help you create a plan to ensure you remain debt free!
What if I'm still not sure?
We don’t blame you one bit, what we are able to do can really sound too good to be true. There are many companies that do what we do. Some quite good, others not so much. First make sure you feel comfortable with your credit counselor and they are supportive. Unless you have an impending court date you should never feel any pressure to act quickly. Take your time. We will never ask you for any money unless you agree to the consolidation plan, enter an agreement with us, and we are preparing to begin contacting your creditors. Even then if you cannot afford the account set up fee we will often waive it or allow clients to pay it over several months. You will receive everything from us in writing and take your time to read it over and ask questions.