Credit counseling will help you in two main ways. First, you’ll speak with a counselor who will bring a fresh and objective perspective to your financial situation, a perspective that may be more helpful than the opinions of family, friends or even creditors. Second, you’ll develop an action plan for achieving your goals and walk away with real, practical steps to take. There are other benefits too. For instance, many of our clients appreciate the chance to look closely at their credit worthiness. And, if you decide to start a debt management program, you’ll enjoy perks like lower interest rates and waived fees. Click here to read more about the benefits offered by a credit counseling session with Clearpoint.
Nothing; we offer this service free of charge.
No, but we can help you via a special counseling service we offer just for those filing for bankruptcy. For more information on this service, click here.
No. Credit counseling alone does not appear on your credit report or affect your credit score. A debt management program, if you determine that one is in your best interest, could affect your credit in the short term but usually results in improved credit in the long term. Read more about it here.
Face-to-face counseling is an in-person session with one of our certified credit counselors at one of our many locations. Phone counseling takes place entirely over the phone. Online counseling allows you to submit much of your information—any time day or night—to one of our counselors, who can then ask questions and discuss recommendations with you via phone. Some clients prefer face-to-face counseling; others prefer being able to speak to someone without driving to a location; others prefer the convenience of handling much of the process online. Whichever you choose, we’ll help get you back into good financial health.
Usually about 60 minutes. Read more about what to expect.
So that you have more time to ask your counselor questions, we suggest that you gather and have available:
If you authorize Clearpoint to access your credit report, your counselor will review it and discusss it with you. This part of the counseling process is important because it gives us a sense of where you stand and who you owe, and helps us make recommendations that are more relevant for you. You can read more about the free credit score and credit report review here.
No. When we pull your credit it’s considered an “educational pull” rather than an indication that you’re seeking new credit. Pulling your credit report gives us critical information about your financial situation and helps us to better help you, so we highly recommend it.
No, but the counseling session will help you learn how to budget and responsibly pay back your debt, which will, over time, repair your credit.
Review your budget goals and start paying down debt.
No single option is best for everyone. As part of a free counseling session, a Clearpoint counselor will review your situation and discuss options that make sense for you.
A debt management program (also called a “debt management plan” or DMP) is a plan to repay all of your unsecured debts in full, usually with a fixed monthly payment and reduced interest costs, while debt settlement typically involves a third party helping you “settle” with your creditors in order to reduce the amount owed. Debt settlement therefore means you repay less of your debt, but it typically results in lower credit scores, additional taxes, and higher fees. A counselor can discuss with you the risks involved in debt settlement, or you can read more about them here.
Bill consolidation combines all of your outstanding debt into a new loan, while a debt management program pays off your debt through single monthly payments that are distributed to all of your creditors by a credit counseling agency like Clearpoint. Bill consolidation is not a plan for paying off your debt and has risky elements and potentially bad consequences. A counselor can discuss this option with you, or you can read here about why in general we think a debt management program is a better solution.
A DMP offers many benefits, including lower interest rates, freedom from collection calls and peace of mind. A counselor will discuss the benefits available to you as part of your free, basic credit counseling session, or you can read more about these benefits here.
If you choose to start a debt management program, you’ll be charged a fee that varies by state: $50/month or the amount permitted by state law, whichever is less. This fee is included as part of the monthly payments you’ll make. In addition, in some states we charge a startup fee to help cover the initial costs related to working with your creditors. This fee never exceeds $75.
The reduction in interest and late fees you’ll enjoy as part of your DMP will more than cover these fees. Before deciding whether a DMP is right for you, you’ll participate in a free counseling session in which your counselor will explain how the numbers work out.
A debt management program is collaborative. Our counselors work tirelessly on your behalf, but there are a few guidelines a client must follow to ensure that their program is successful:
Sound tough? Don’t worry—our counselors will be available throughout the program to address any questions and concerns you might have about your financial situation as your debt repayment progresses.
Gradual repayment of your unsecured debt directly or through a debt management program will usually help your credit score. A DMP is a good alternative for those with damaged credit resulting from high credit card debt, late payments, missed payments, or accounts in collection. Many creditors mark delinquent accounts as “current” after accepting your DMP and receiving three consecutive payments. Others will note on your credit record that you participated in a debt management program (although this doesn’t affect your credit score). Your counselor will let you know what to expect after reviewing your unique situation. For more information on how DMPs affect credit scores, check out this blog post.
Most of our clients repay their debt within 3–3 1/2 years. The maximum length of time you can be on a DMP is 5 years. Your counselor will estimate your payoff time during your counseling session. If during the program you are ever in a position to make larger payments, you can do so and reduce the amount of time it takes you to complete the program.
Collections calls may continue for the first 90 days of your debt management program while your creditors are processing the program paperwork. During these three months, you may tell the callers that you’ve joined our DMP and refer them to our creditor relations department. After this initial period, the calls usually stop.
Unfortunately, no. Any cards included in the DMP will be closed and therefore unusable. In the case of cards that for some reason cannot be included in your DMP, we strongly advise that you do not use them during the program. Your creditors will have agreed to their concessions (lower interest, waived fees, etc.) on the condition that you stop using credit until your debt is paid off. Creditors will notice if you obtain new credit or place charges on open credit accounts and they will discontinue the concessions and, most likely, drop you from the debt management program. If you have a business card not included in the plan, it’s possible that you can use it. But speak with your counselor to be sure that you’re safe to do so.
Anything that involves secured debts—including car loans and mortgages—should not affect your DMP. However, be aware that you may not be in ideal credit standing when you first start your DMP. Because your accounts will be closing as part of your program, you’ll have less available credit, which may lower your score in the short-term. (Read about how it works here.) As a result, you may not be able to get the lowest possible APR. If you do decide to shop for a car or refinance or buy a home, we strongly encourage you to first pull a copy of your credit report from annualcreditreport.com and pay the small fee to receive your score. This way you’ll know your position before you seek your loan.
If your lender requests a letter or payment history from us, we will be happy to provide that to you to pass along to them.
In most cases, yes. However, creditors are likely to charge higher rates until your credit has improved. Your counselor will offer tips to help you rebuild and improve your credit.
That would be ideal, but often clients can’t afford to pay their creditors and still have enough for their first DMP payment. If this is the case, you may be late with your accounts in the process of getting your DMP started. This should have no negative effect and many creditors will perform a “re-age” on your account after they’ve accepted the proposal and you’ve made 3–4 payments. In the re-age process, the creditor brings your account to “current” status and drops any late or over-the-limit fees.
Absolutely. If you can pay extra, you certainly are encouraged to do so. Just let us know how you’d like your extra funds to be distributed (all to one creditor, some to each, etc.) and we’ll be happy to set it up on your behalf.
Note: We strongly recommend that you make extra payments through us rather than directly to your creditor. Many creditors will drop your benefits (lower interest rates, waived fees, etc.) if they receive direct payments from you while you’re on a DMP. In addition, paying through us helps us better track the balances on your creditor accounts.
Unfortunately, we can’t process partial payments. But you can easily budget for bi-weekly payments by opening a separate bank account that is used only for your monthly DMP payment. Each time you get paid, you can put half (or more) of your total monthly DMP payment into this separate account. This will have the effect of bi-weekly payments and the full payment amount will be in the account when it comes time for your monthly draft.
You’ll continue to receive monthly statements from each of your creditors, which will reflect the payments we make on your behalf. You’ll also receive a monthly statement from Clearpoint showing our records of your debts and the payments made to each account. In addition, after your first payment is made and distributed, you’ll be able to access your DMP information 24/7 through the secure log-in on our website.
No, we are a nonprofit that works to educate you and help you achieve good financial health. Many creditors voluntarily contribute to us in order to further our mission. And clearly it is beneficial for creditors to have their debts paid in full, which is something our debt management programs accomplish. But DMPs are also the safest way for many consumers to pay down their debt and that is why we offer and recommend them. Note that creditor contributions do not affect whether we recommend a specific client for a DMP or have any bearing on which creditors can and can’t be included in a DMP. In short, creditor contributions may help us to continue helping you but don’t otherwise affect the services we offer.