Credit Counseling

What is It?

Credit Counseling is the process of meeting with a Certified Financial Counselor to examine, evaluate, and address challenges within your current financial situation. This is an interactive session where the counselor and the client work together to set goals while also finding solutions to financial barriers. During a routine Credit Counseling session, the counselor will go through the client’s income, expenses, assets, and liabilities, and will develop a detailed monthly budget. Counselors use the Credit Counseling process as an opportunity to educate each client on how to negotiate directly with creditors, change personal spending habits, and develop strategies for saving money. Counselors also have the ability to offer a debt management program to those that would benefit. The counselor will thoroughly discuss advantages and challenges of all options, including personal loans, bankruptcy, debt management programs, and self-administered payment plans. Counselors will also discuss client rights, public and non-profit resources that can offer assistance, and applicable laws and regulations. The entire Credit Counseling process will focus on you and your specific situation.

Don’t let the thought of this process overwhelm you, though. At the conclusion of a credit counseling session, you and your counselor will have developed a Personal Action Plan that will provide you with a detailed plan of attack for moving forward.

Process

Certified Counselors

All of our counselors are certified through an independent agency and are required to complete 20 continuing education hours every 2 years. Our counselors are highly compassionate and understand that during life’s journey, we often travel through rough patches. Although some of the rough patches are self-inflicted, other circumstances are completely out of our control. Many of our counselors have been in your shoes before and know what it’s like to have creditors calling. Through their experiences and education, you can be sure they will listen and do what they can to offer assistance, relief, and direction.

Debt Management

After completing the credit counseling process, your credit counselor may recommend using a Debt Management Program (DMP).

A Debt Management Program is a debt repayment program that is not a loan. Our Debt Management Program allows you to consolidate all your unsecured debt (such as credit cards; hospital, clinic, & dental bills; store cards; personal loans; etc.) and combine them into one simple payment each month. This consolidated monthly payment is made to FLCS. Each month, FLCS will disburse payments to each of your creditors in order to satisfy the agreed-upon terms. The common benefits of a DMP are reduced interest rates, reduced monthly payments and reduced timeframe for payoff. Most clients on FLCS’s program are able to pay their debt(s) off in 3 to 5 years.

DMPs are not right for everyone and every situation. Using a DMP may hurt your credit rating or scores, as well as your ability to obtain new credit while on a DMP. If your financial problems stem from too much debt or your inability to repay your debts, we may be able to help. If a DMP results in a payment that fits your budget, will save you money, and will shorten the length of time you will need to pay off your debts, it could be a good fit for you. If the required DMP payment is not feasible given your budgetary constraints, or if the program will not save you money or shorten the time needed to pay your debts, we may suggest you look at other alternatives that would be a better fit.

Bank Loans

Your credit counselor may recommend that you research your eligibility for a bank loan – secured or unsecured – if that would be a beneficial option for you. With a bank loan, the bank would actually lend you the money to pay off your current debt(s) so that you owe only one creditor (the bank), with one monthly payment at a fixed interest rate and fixed payoff term.

Self-Pay Programs

In many cases, a self-pay program will be your best solution. In this scenario, your credit counselor will help you set up a written plan to pay off your debt(s) on your own. It will include specific instructions on monthly payment amounts, what to do when each account is paid off, and an estimated time of payoff.

Bankruptcy

Although bankruptcy is usually a last resort, sometimes this can be the only option available. If this is the case, your credit counselor will encourage you to seek legal advice concerning your finances and available options.

Importance of Financial Education

Regardless of your situation, financial education is a vital tool to help you reach your goals and objectives. Family Life Credit Services offers financial education on subjects ranging from basic budgeting to building and rebuilding your credit. We currently offer 4 different education courses: Money and Faith in Motion©, Money in Motion©, CreditWise, and Credit When Credit Is Due©. Everyone that enrolls in the Debt Management Program is required to complete either the Money in Motion© or Money and Faith in Motion© course, and we have seen dramatically increased success in completing the Debt Management Program for those that have taken the course. These courses are also available for those not enrolling in the Debt Management Program for a small fee. We offer the CreditWise program in area high schools, universities, and job service centers, and we also offer the Credit When Credit Is Due© program in area homeless shelters and halfway houses. We’ve recently begun offering monthly Brown-Bag Lunch Financial Education Webinars which are open to our clients and the public at no charge.

Personal Action Plan

Once you complete your credit counseling session, your credit counselor will provide a Personal Action Plan for you that will detail the steps you will need to take to move forward with your goals. This Personal Action Plan will also include the issues you are having, your short-term and long-term goals and objectives, and other possible resources that may be available to you. Clients find Personal Action Plans to be very helpful in their quest to become financially free.