Help for a credit crisis may be only a phone call or online connection away. Some nonprofit credit counselors offer counseling online, over the Internet or in person. There is even a 24-hour hotline, operated 365 days a year, for people in the middle of a credit crisis because of issues related to possible foreclosure. A credit crisis can be emotionally draining, but a key to getting through it is remaining calm and acting on advice from a reputable source.
Home Ownership Preservation Foundation
The Home Ownership Preservation Foundation operates a 24-hour hotline. The hotline, which is available by calling 888-995-4673, is staffed by trained counselors certified by the U.S. Department of Housing and Urban Development. The counselors specialize in foreclosure avoidance but also are knowledgeable about issues related to all forms of credit and debt. The counselors will listen as you explain your situation and then offer initial advice before recommending a face-to-face meeting with a HUD-approved counselor in your area. Although followup counseling is available by phone and the Internet, face-to-face meetings can be more effective.
Foreclosure Avoidance
The credit counselor can recommend loan modification or other foreclosure avoidance programs if your credit crisis is caused by delinquent mortgage payments. Loan modification allows the lender to change the terms of your mortgage to make it more affordable. Other options include forbearance, which allows your payments to be reduced or even suspended for a temporary period while you recover from a hardship. Payment plans may also be available, including allowing you to catch up on missed payments by paying a little extra each month. The counselor will help choose an option best for you and contact your lender with you on the phone to work something out.
Debt Management Plans
Debt management plans, offered directly by the counseling agencies, are a very effective tool for managing a credit crisis. For a monthly management fee, the counselor will take control over your finances, including the payment of most of your bills. The program requires a long-term commitment of about four years as you and the counseling agency work together on permanent solutions to your financial and credit problems. The counseling agency will contact your lenders and debt collectors to negotiate affordable monthly payments, lower interest rates and even the waiver of some finance charges and fees. Most of your bills are paid by the agency after you make a lump sum payment to the agency each month.
Bankruptcy Attorneys
Bankruptcy attorneys can also provide help during a credit crisis -- but keep in mind that their ultimate goal is to earn money by representing people in bankruptcy filings. Despite that, bankruptcy attorneys can be a valuable resource because they can explain the bankruptcy process during initial consultations that are usually free.
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