Free Debt Management and Problem Credit Repair Advice

Tackling a lot of debt seems like an insurmountable task at times. It may require you to develop skills of budgeting, negotiating with creditors, and exercising self control that you aren't used to doing. Still, there are many resources to help you learn how to take charge of your financial life and there are consumer credit counseling agencies with services to assist if you're struggling with debt.

DIY Resources

There are resources on the Internet that help consumers figure out how to repair their credit and manage their debt. The Federal Trade Commission provides information on the steps consumers need to take to repair their own credit on its website. Other online resources with authoritative debt management and credit repair advice include MSN Money and Bankrate.com. There are calculators such as the one provided by Vertex 42 that let you plug in your debt amounts and figure out how to pay them down while paying the least interest.

Find a Credit Counselor

Many businesses offer credit counseling, debt management, debt consolidation, debt elimination and similar services. Many are scams. Some options for legitimate free consumer credit counseling are agencies listed with the Association of Independent Consumer Credit Counseling Agencies and those with the National Federation for Credit Counseling. The Federal Trade Commission also suggests you could look at local universities, credit unions and offices of the cooperative extension service. If a credit counseling agency will not take you on because you are unable to pay, look elsewhere, the FTC advises.

Credit Counseling

The initial counseling session with an agency who operates through AICCCA or NFCC should be absolutely free, according to these agencies' rules. This means that, in person or via phone or Internet, the agent asks about your income, expenses, debts, spending habits and goals. From this, the agent develops a plan for paying down debts and getting out of financial trouble. The agent should be able to make suggestions for repairing credit. If the situation is dire, the agent may recommend a debt management plan.

Debt Management Plans

With a debt management plan, the consumer and agent agree on a budget and a chunk of that budget goes to the agent who pays the consumer's unsecured debts each month. Agents can charge a small fee for this but according to the AICCCA and NFCC rules, if a consumer cannot pay, according to certain guidelines, the agency must still help. Since 35 percent of a consumer's credit score is payment history and another 30 percent on amounts owed, having an agency make consistent payments to reduce debts will improve your credit score. On the other hand, if they negotiate down interest or fees as they often do, that might hurt your score in the short run.