Credit Counseling- Good or Bad?

Dear Gil,
Is it wise to go through a non-profit credit counseling service to clean up your credit report?  I recently contacted a company who helped me to come up with a budget and establish a plan to eliminate my debt.  The plan called for me to send $350 monthly to the company so they could disburse the money to the creditors.  Out of that $350, they would take $28 a month for a fee.  After getting off the phone I realized that after paying $28 a month for 3 years, I could have paid off other debt.  Please advise.  Is this something that I should tackle on my own?

Thanks and Make it a Great Day!

Signed,

L.R.
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Dear L.R.,

Thank you for your question.

 

I try to advise people to try and avoid credit counseling if they can for a couple reasons.  First, it initially takes the responsibility of handling your credit issues, out of your hands.  Some of us have made some very big mistakes and also have fallen on bad times, but when one handles their credit by making the calls themselves, there is something that happens within us that makes us feel as if we are fighting our own battles rather than pushing it off on someone else.  The second reason is that I have heard some horror stories of how people thought the credit counseling agency “dropped the ball” when it came to their accounts.  If you are talking about a relatively small amount of creditors, then try attempting to make the calls yourself and negotiating the terms.  You may be surprised at how well you do without the help of a professional.  Furthermore, you will instill some confidence within yourself that you are ‘handlin; yo’ business”.

 

I wish you the best as you take hold of your financial future.

Gil