YOUR CHOICES WHEN

YOU EXPERIENCE

FINANCIAL DIFFICULTY

You have choices when you are experiencing financial difficulties. No one program works for all people or all situations. Consumer Credit and Budget Counseling’s Certified Counselors will help you explore your options so that you can resolve your debt problems.

Do it Yourself

Budgeting: We are often asked “How can I improve my credit?” One excellent way to take control of credit is to use a budget. Think of your budget as your spending plan. It helps you plan where you will spend your money - - and how you can save some of it. Your monthly budget sets spending guidelines throughout the month. And at the end of the month, you have a scorecard of how you did. It is surprising the amount of money we waste each month on unnecessary purchases - - $5 here, $10 there, no big deal. By keeping track of all your spending, you may discover several hundred dollars “leaking” from your paycheck.

There are four steps to making a budget:

1. List your income
2. List your expenses
3. Compare income and expenses
4. Set priorities and make changes so that your income will be greater than your expenses

Look at your budget as a friend and not as a punishment. It can guide you back to financially secure ground. Soon your monthly budget will become a way of life. And you will be able to foresee future debt problems, thus allowing you to resolve them before they become serious. (For further information on Budgeting and to compare your budget to individuals and families in similar situations contact your Certified Counselor at Consumer Credit and Budget Counseling.)

Call your Creditors: Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Most creditors offer some type of in-house assistance program. These programs can typically reduce your payments for periods of up to 6 months. Unfortunately, not all creditors will help and you may find that one creditor “breaks the camels back”. If that is the case look into the next option Credit Counseling.

Credit Counseling

Credit Counseling is financial education, budgeting assistance and debt counseling. Certified Counselors at agencies like Consumer Credit and Budget Counseling will review your whole financial situation including both your budget and your debt and will educate you on the merits of the options available to you.

Debt Management Programs: Consumer Credit and Budget Counseling offers a Debt Management Program as part of our educational and financial assistance programs. In a Debt Management Program the CC&CB will arrange for your creditors to accept lower payment and reduce your interest rates. Many creditors will also “re-age” (bring current) your account and report it to the credit reporting agencies as current.

A Debt Management Program is not for everyone. It is a HARDSHIP program and may negatively affect your credit report. Creditors may report that an account is in financial counseling. While this reporting does not affect on your credit score, it will limit your ability to obtain additional credit while in a program. Also, the program does NOT erase reported history on your credit report if it is correct and most creditors will close your account upon acceptance on their program

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home. What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

The right to file bankruptcy is an important tool which society provides for those with significant debt problems. It is often stated that bankruptcy should be considered as a “last resort” for financially troubled consumers. Bankruptcy should be neither the first option nor the last resort; each case must be examined on its own merits. Although bankruptcy is not a magical cure, it is an important alternative for a range of financial problems.

Bankruptcy may provide immediate protection, particularly for individuals facing foreclosure or repossession of property. Even those who are not in short term danger of repossession or foreclosure may often decide upon bankruptcy simply for the relief of having debts lifted in order to get a fresh financial start.

There are two main types of personal bankruptcy. Chapter 7 and Chapter 13:

Chapter 7 bankruptcy is commonly called straight bankruptcy or liquidation. Under Chapter 7, certain types of property (such as tools of the trade, part of the equity in your home or a certain amount of cash and clothing) are exempt, or protected, from bankruptcy. That’s the property you’re allowed to keep. The rest of your property may be converted to cash, which is then divided up and given to your creditors Your bankruptcy is then discharged (completed) and creditors can no longer try to obtain payment from you, even if all your debts are not paid off.

Chapter 13 bankruptcy is often called the wage earner’s plan. You must be employed or have a regular income (such as alimony, pension, support, or government benefits) to be eligible to file Chapter 13 bankruptcy. Your secured debts cannot total more than $922,975 and unsecured debts cannot total more than $307,675. Consumers who are interested in filing bankruptcy are encouraged to seek the services of an attorney who specializes in bankruptcy.

Consumer Credit and Budget Counseling offers both the required Pre-Bankruptcy credit counseling and the Post-Bankruptcy Debtor's Education.

Debt Negotiation Programs

Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit.

Debt negotiation firms often claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, pay $4,000. The firms often pitch their services as an alternative to bankruptcy.

They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company.

While this may sound like a good option it is not suitable for most debtors. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple.

What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved. While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.

Customer Service: support@cc-bc.com 888-738-8233 x-204
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Consumer Credit and Budget Counseling
299 South Shore Rd
Marmora, NJ 08223

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Consumer Credit and
Budget Counseling
ph: 888-738-8233
fx: 888-738-8234