To start with, trustworthy legal credit repair services are almost entirely non-profit organization. Their counselors will not pressure you to join any Debt Management Program (DMP), because they do not profit from it.
In addition, they will offer free education and detailed information about all the services they provide. Their counselors will discuss your entire financial situation and help you develop a plan based on the best option for your personal financial needs.
Other things to consider when choosing debt management and credit repair counseling agency:
- The credit counseling agency should be in business for at least ten years
- Their counselors should be certified by an independent organization such as the National Foundation for Credit Counseling (NFCC)
What happens when you join a Debt Management Program?
While you’re on a DMP, your credit reports will get updated to “In Debt Management Program“. This might disqualify you from getting new credit (certainly a mortgage). However, your Fico score is not affected by this (See Factors Excluded from the Fico Score).
When you complete the program, that remark will be erased from your files, and you will be eligible once again.
Are there any limitations to credit repair debt management services?
Yes. While they can certainly help with overwhelming credit card bills that have not yet defaulted, they cannot help with any credit cards debts that have already defaulted. They can offer reduced payments and interest, but not settlements for less.
As a general rule, they can reduce your total monthly payment down to 2% of your total debt, and can also reduce the interest to around 10%. However, you must stop using credit when you enter the program.
The largest non-profit credit counseling agency is Money Management International (www.moneymanagement.org). They have offices in more than 24 states, and they also offer counseling 24/7 over the phone or Internet.
Another reputable non-profit credit counseling service is the National Foundation for Credit Counseling (NFCC), which was set up by the credit card industry to offer assistance to people who are struggling to pay their credit card debts.
Try finding a member at www.nfcc.org. They can negotiate lower interest rates and payments so that you can pay off your debt. When you complete the program, you will have decent credit. They are also certified pre-bankruptcy counseling and can look at your whole financial picture and advise you on how to proceed.