The average counseling client had $24,000 of credit-card and other unsecured debt last year and $39,000 in household income, says Sally Parker, NFCC senior vice president. On the standard debt plan, that client would have to pay $540 a month for five years.
But with additional concessions on fees and interest - but none on principal - your payments could be reduced to either 2 percent or 1.75 percent of debt each month. At 1.75 percent, the monthly payment to eliminate $24,000 in debt would be $420 over five years, Parker says.
"It's the difference between remaining current with their mortgage, or paying their rent or funding other unexpected expenses," Parker says.
"It's a good first step," although hard-pressed consumers really need forgiveness of principal, says Travis Plunkett, with the Consumer Federation of America.
Lower repayment terms are being rolled out at counseling agencies, say the NFCC and another trade group, the Association of Independent Consumer Credit Counseling Agencies. Be aware, each credit-card issuer decides how much leeway to grant a specific customer, so some consumers might get more leniency than others.
Agencies that offer debt management must be licensed in Maryland to serve residents. For a list of licensed counselors: www.dllr.maryland.gov.
Reputable counseling agencies will help you with budgeting, let you know whether a debt management plan is right for you or if you are better off seeking another alternative, including bankruptcy.
