Credit Counseling Timeline

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So.............what happens when you call? (Juniper/Ba

 

 

> Consumer makes the initial call to a Credit Counselor:

You will be asked some basic questions, your name & contact information will be taken. An appointment will be set for you and a counselor to review your financial situation.

 

> Before your appointment:

You will be provided several forms to fill out, including detailed information on your income and expenses. Gather up interest rate information on your credit cards as well.

 

>The day of your appointment:

Expect to spend at least an hour on the phone (or in person) with the counselor. You will review your income, each of your expenses, and what you hope to accomplish with the appointment.

Your counselor may make suggestions on where you can reduce expenses, whether a DMP, Bankruptcy, or other plan might benefit you, and the details of such plans.

If a DMP or Bankruptcy is not right for you, you may be given advice on priority in paying debts, which should be paid as a priority, which can be paid late, which may not be paid at all if necessary.

You will be given a written summary of your session, including any action plans suggested.

You may decide to implement a plan immediately, take some time to decide, or to do nothing at all. This, like all choices in debt management- is entirely up to you.

 

If you choose Bankruptcy:

> You will be given a second appointment for pre-bankruptcy counseling, required before you can file with the courts. Upon completion a certificate will be provided to you.

 

If you choose to do nothing:

> You will receive a summary of your counseling session and your account closed.

 

If you choose a DMP:

> The counselor will collect the names, account numbers, balances, interest rates, minimum payment info and due dates for each of your credit cards.

Some plans additionally include unsecured personal loans, others may include monthly utility and other household bills to be paid by the agency.

> You will be provided information on the "proposal" to be sent to each creditor, including target interest rate, monthly payment (either as a flat amount or a percent of the remaining balance) and proposed disbursement date. If you aren't- ask!

> You will be given an initial plan payment amount, due date, and estimated length of the plan.

> You will review your budget with the plan payment included to make sure you can actually complete the plan. A reputable counselor will not let you sign up for a DMP that you cannot actually fund.

 

 

After you have agreed to the DMP:

>You may be asked to make your first payment directly, with subsequent payments by money order or EFT.

> CLOSE YOUR ACCOUNTS! Don't wait for the creditor to do it. If you close them they report as "closed by consumer" which is neutral.

Additionally, they may not be reported as "managed by consumer credit counseling", which is more likely to be reported if the creditor closes the account.

>The consolidation firm will send a proposal to each of your creditors. Your creditors may agree, reject or counter-offer the proposal.

This process may take several weeks to a month or more as creditors receive as many as several thousand proposals daily.

Some creditors accept proposals electronically and will reply within a few days, others insist they be mailed and will take considerably longer.

>The counselor should follow up if a reply hasn't been received within a few weeks. By one estimate, 25-30% of proposals get "lost" in the system and need to be re-submitted.

>You should be informed when your creditors reply with acceptance, rejection or a counter-offer.

> You will be asked to make the estimated payments every month until each of your creditors has agreed to a plan and a final payment amount can be calculated. This process should take no more than three months.

> INSIST on a copy of the agreement with each creditor, or a summary of terms for each creditor. How else are you to know if the proper amounts are being paid, and what concessions they have agreed to?

 

 

While you are in the plan:

>Make sure your payments are disbursed on time. Review the monthly statements from your creditors to make sure the payments are arriving on time and in the correct amounts.

>Review your credit reports periodically to make sure the accounts are not reporting as "late" or any other negative status as a result of the plan.

>See that any concessions agreed to are actually implemented. Are the rates actually reduced? Fees removed?

>If you cannot make a payment on time, contact the counselor immediately! Some creditors will cancel the plan and reverse any concessions they made if you miss a single payment.

> You may review your budget and your progress from time to time, making adjustments as necessary.

> if your plan includes household utilities and insurance payments, make sure to tell your counselor if these amounts change.

>You may be provided financial literacy, credit education or other educational materials as part of the program. Some counselors will award a certificate of completion following a simple exam on the materials provided and give you a letter to send to the CRA's with a statement that you have completed the financial education programs. The CRA's may add this as a consumer statement.

(IMO The value of adding a consumer statement is questionable and possibly harmful as it's a lasting indicator that you participated in a DMP- which some creditors view as a negative. )

 

>> Make sure to include some form of savings in your budget, even if it's a modest amount. An emergency fund of $500-$1K is highly recommended as you will be closing your revolving accounts and will find access to new credit difficult. Savings you can access for unexpected emergencies can be a lifesaver.

 

 

 

When you complete the plan:

>Review your credit reports to see that any notations of "credit counseling" have been removed from your accounts.

>Ask the counselor about credit rebuilding assistance programs, some offer them.

>Begin rebuilding your credit by adding new, open accounts in a methodical and modest fashion.