Recently, I caught and article in my local newspaper about the above mentioned topic. It brought back to me a number of memories about helping our customers decide what do about their debt problems and what resources are available to help and which ones they should choose. They article was written by Liz Weston from “Nerdwallet” a website that provides consumers with financial advice and information in a number of financial areas. I confess that I hadn’t heard about this web site prior to reading this article, but it seems to be a helpful and informative publication.

As you know, if you follow my blog on this website and read our publications, we give our followers instructions on how to solve their own debt problems and not rely on any outside resources. But for purposes of full disclosure, we had some clients were heavily in debt and didn’t have the self confidence to confront it them themselves and we decided to refer them to local office of the National Foundation for Credit Counseling (NFCC) for assistance. In fact, we actually met with their head management at their headquarters located in Maryland at the time to discuss how we could work together for our clients’ mutual benefit.

Overall, I agree that the non profit NFCC is a much better alternative to the private debt management services that advertise how easily they can solve your debt problems and many times end up creating more problems than they solve. However, some of the demands that the NFCC makes as part of the agreement you must sign to enroll in their program are so restrictive that they sometimes drive people to these other companies.

For example, they demanded that some of the people we sent to them cut up their credit cards as part of their enrollment process. Prior to the recession, many of them had very good credit worthiness. When the recession hit and both spouses lost their jobs, they began to use their credit cards to pay all of their bills instead of cash or checks hoping that they would find new employment in the near future. When that didn’t happen they quickly became insolvent. Was that a mistake?? Of course, but hind site is always the best site.

Plus many of the cards were “maxed out” and not usable. If they had as much income coming in before the recession as after, they wouldn’t have a problem. All of this boils down to one thing. When you have major financial setbacks and you are in danger of not meeting your obligations you must get out in front of the problem. Instead of ignoring your creditors you should call them, update them honestly about your situation and try to negotiate a financial arrangement you can afford, whether it’s lower payments, forbearance or both. Once they are aware of your situation, you will reach an agreement almost every time.

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