If your finances are spinning out of control it may make sense to get some help. The first task is always to help yourself. Stop and assess your debts and credit history and work on a new path of debt management and credit repair on your own. No matter how difficult credit and debt problem may become, the first step is stop and evaluate what the problems are. Look over your budget, review your bills and review your credit report. Read about all the tools and techniques to reduce debt payments and clear up previous bad credit yourself. When this is too overwhelming, outside help may be needed.
Reputable credit counselors can offer advice to help improve your money management skills, manage the debt you have amassed and develop a budget you can live on. They are certified counselors and will take the time to develop a plan that is customized to your situation. They help you take the steps you need to make to get your finances back in shape.
Credit repair organizations are not federally regulated and less than half of all states have any local regulations. Scams and fraud are out there. It is important to remember that while this organization can help you climb out of debt, they are in it to make money or cover their costs depending how the program – paid for by the fees you pay them to help you. Obviously if you are already in debt, this will increase your expenses.
If you are on the brink of bankruptcy this may be your only course of action. As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. So if you are looking for a credit repair organization, be sure you are very careful in making that selection. You can find a state-by-state list of government-approved organizations on the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.
By law, credit repair organizations must give you a copy of the Consumer Credit File Rights Under State and Federal Law before you sign a contract. This is document with a lot of small print but the law contains specific protections for you. Credit repair companies cannot:
Make false claims about their services. Face facts, you will not get out of the trouble you are in overnight no matter what they promise.
Charge you until they have completed the promised services. Beware of any upfront fee that sounds questionable.
Do anything for you until they have your signature on a written contract and a three-day waiting period has expired. During this time, you can cancel the contract without paying any fees.
Be sure you get a written contract that spells out your rights and obligations, and read it carefully. Look for:
The payment terms for services, including their total cost spelled out clearly.
The description of the services to be performed should be detailed.
The contract must specify how long it will take to achieve the results they expect to get for you.
The contract must spell out any guarantees they offer.
The company’s name and business address – there are a lot of internet-based companies that may only collect a fee and disappear.