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Question for the Money Doctors

Question submitted on Mar 31, 2012.

Question

I receive SSI, SSDI, medic-CAL (California''s equivalent to state medic-AID), medic-CARE am unemployed and am not sure what I can do to pay off just about everything!
Paul

Answer

If you''re deeply in debt and struggling to stay afloat, a credit counselor can help you figure your finances and create a spending plan. Counselors can set up a formal debt-management plan, with lower interest rates and more favorable terms, and get you out of debt within five years. They don''t handle bankruptcies, but they can recommend that you see an attorney.
 
 Stick with reputable, nonprofit agencies that follow best-practice standards, employ trained and certified counselors, and are members of the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org)  or the National Foundation for Credit Counseling (www.nfcc.org).
 
 Usually, a credit counselor will give you basic advice free. Setting up a plan should cost $50 to $75 initially and $25 to $50 per month thereafter. If a counselor you''re considering charges higher fees, or won''t disclose them, go elsewhere. Be sure to check out any agency with the local Better Business Bureau and the state attorney general''s office to see if there are any unresolved complaints. 

One of the programs you can use to get out of credit card debt is Consumer Credit Counseling Services ("CCCS"). They are a non-profit organization that is paid for by creditors. The debtor pays a minor fee to use the program. CCCS will very likely be able to negotiate reduced interest rates on your credit cards. Some credit cards companies will charge no interest when you are in this program. CCCS will sit with you to help you set a payment schedule that you will be comfortable with. You will cut up all (perhaps you keep one or get a debit card) of your credit cards so that some day you can be debt free. Their website is: www.cccsstl.org

Having said that, using a credit repair service like CCCS can have a greater negative effect than going through bankruptcy on your credit score. But that will eventually be behind you too. I do not recommend bankruptcy for you unless there is no other way.

Sometimes debt is so overwhelming that the only way out of debt is bankruptcy.  Although bankruptcy eliminates some debt, it doesn't eliminate all types of debt. For example, you will probably not be able to eliminate child support, most tax debts, student loans, and secured debts. If you need to talk to a lawyer, you can locate a bankruptcy attorney near you at Martindale-Hubbell®, an attorney directory: www.martindale.com/


For additional information visit http://www.360financialliteracy.org/