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Question for the Money Doctors

Question submitted on Apr 15, 2010.


I'm one of those college students who got a credit card, and charged way more than I could afford and now can’t pay it back. I have $4300.00 on a credit card and work 2 jobs. I’m barely making ends meet, still live with my parents and have been making minimum payments since last summer. Should give up paying some bills on time to contribute more to the credit card? Should I consolidate and get a small loan? If I could go back in time, I would have cut this credit card in 20 tiny pieces, but I'm stuck. Please advise.

Desperate College Student


Dear Desperate,

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 ( or the National Foundation for Credit Counseling (

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:

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

There is an excellent course I recommend to clients (usually for their kids) to help them get out of debt and get a sound financial footing. It is Dave Ramsey Financial Peace University. The program is given at churches across the country. It is a 14 week course that meets for two hours in the evening every week. There is also homework (reading) which takes about one hour per week. If you are married, I recommend that both spouses attend. It costs about $100 for the materials (one set per couple). Here is a link to the website.

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