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Four reasons to make an appointment with a Credit Counselor

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Handling your personal finances can be a private affair — solitary, even. But it doesn’t have to be. Although it can be understandably nerve-wracking to open up the details of your financial situation to another person, sometimes the fresh perspective is much needed.

Credit counselors are personal finance professionals trained to help customers take a look at their overall financial situations and come up with strategies for meeting money goals.

Here’s more on why it’s often worthwhile to meet with a credit counselor, and how to choose a good one.

4 Reasons to Seek Credit Counseling

1.Create or Review Your Budget

A lot of conflicting advice is floating around out there about budgeting — and it’s not always easy to know where to start. According to a 2019 poll from Debt.com, only two-thirds (67 percent) of Americans have their households on a budget. And yet only one-fourth of respondents believe everyone should budget.

A credit counselor can help you create a budget or make improvements to your current spending plan based on factors like your income, debts, fixed and variable expenses, as well as your savings. Sometimes it’s simply helpful to have another set of eyes — a well-trained set — go over the details of your situation and put together a realistic budget.

2. Create a Plan for Your Financial Goals

Creating a budget that works for you is a wonderful first step. But budgeting is not the end goal; it’s just laying the track to help get you where you want to go. It’s important to have overarching financial and life goals driving your budget.

Credit counseling can help you create a budget that serves as a snapshot of your current financial situation. But it can also help you look into the future and connect that budget to your financial goals — like building an emergency fund, taking a vacation, buying a home, renovating your home, buying a vehicle, saving for retirement, saving for your child’s college education and more.

3. Enroll in a Debt Management Plan (DMP)

Many people seek credit counseling because they need help with their debt. A creditor counselor can determine if you’re a candidate for a DMP through their agency.

As U.S. News & World Report writes, a counselor may suggest a DMP “if you have a lot of unsecured debt with two or more creditors but enough income to make a payment each month.”

If you do decide to enroll, you’ll start making one monthly payment to the agency rather than multiple payments directly to your creditors. The agency will try to work out a plan with creditors on your behalf in which you pay reduced interest and fees in exchange for committing to your monthly payment. Unlike financial counseling, which should be free, participating in a DMP will cost a monthly fee of around or less than $50.

4.Get Free Advice on Debt, Savings & More

Few things in life are free — but credit counseling with a non-profit agency often is, so why not take advantage of this resource to strengthen your financial plan?

What to Look for in a Credit Counselor

The key to getting the most value from your meeting is choosing a legitimate and qualified non-profit organization in the first place. Hint: It’s a very good sign if the agency is accredited through the National Foundation for Credit Counseling. Do your research online before choosing the agency with which you’ll meet, too.

Making an appointment with a credit counselor is a great way to get perspective on your personal finances, create an airtight budget, come up with a plan to work toward your financial goals, and get into a DMP if necessary.

Bill Taylor

The youngest in team, he is responsible for reporting all the rumors and leaks related to gadgets and software. Other than spreading rumors, Bill also likes to write about social networking and cyber security.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

530 W Allegan Street, 7th Floor
Lansing, MI  48909-7720
877-999-6442

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