Are you in debt up to your eyeballs? For years, money expert Clark Howard has advised callers to his show just like you to get in touch with a local affiliate of the National Foundation for Credit Counseling (NFCC) for low-cost debt counseling.
The NFCC offers debtors hope when all seems lost.
But after hearing Clark talk about the NFCC, you may still be scratching your head and wondering what exactly this organization does.
If that’s the case, read on…
Introducing the National Foundation for Credit Counseling
American satirist Ambrose Bierce once defined a creditor as follows:
“CREDITOR, n. One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions.”
Do those words hit too close to home for you? Are you struggling to pay the monthly minimums on your credit cards? Do you dread the constant collection calls and harassment because you’re having trouble paying your debts?
Then you’ve got to learn about the National Foundation for Credit Counseling.
Founded in 1951, the NFCC is the largest non-profit financial counseling body in the United States. It’s goal is twofold: To educate consumers about financially responsible behavior and to help them climb out of debt when all hope seems lost.
The NFCC’s member agencies served 1.1 million clients in 2016, according to the organization’s website. And with the low-cost credit counseling offered by its members, the non-profit has been a partner with clients every step of the way as they paid back $1.2 billion in debt to creditors that year alone.
You could be one of those debt-free individuals this year! But first, here’s some preliminary info about the NFCC that you need to know.
1. The NFCC has 600 offices across the country
Rather than being a monolith, the NFCC is actually a network of some 1,600 certified credit counselors working out of nearly 600 offices across all 50 states and Puerto Rico.
Each counselor and office that offers services through the NFCC is accredited by the Council on Accreditation, a third-party non-profit accrediting organization. Individual offices must be re-certified every four years.
You can find a member agency near you at NFCC.org.
2. Is there a cost to work with the NFCC?
NFCC affiliates offer low-cost debt counseling, among other things. So yes, there is a fee. But if done right, this will be money well-spent.
The NFCC advises discussing fees in advance, but warns that you shouldn’t be asked to pay a cent until services are rendered.
How much should you expect to pay? Typical fees include a set-up fee of $50 or less and possible monthly fees in the $25 range, according to the NFCC website. Some cases of extreme financial hardship may qualify for a fee waiver.
3. What exactly will the NFCC do for me?
When you get in touch with an NFCC affiliate, you’ll typically arrange to sit down for a face-to-face financial review session. This session usually lasts about an hour.
You’ll want to prepare for it by bringing a full accounting of all your debts and assets. The counselor can’t help you formulate a plan until they know how much income you have and the extent of the debts that you owe.
As it turns out, about a third of clients seen by NFCC member agencies only need some simple budgeting help to shape up their financial lives. Others, though, may need to get on a debt-management plan. More on that in a moment.
No matter how big or small your debt is, chances are your counselor will have seen a similar case before and will know how to proceed. Remember, there’s not much new under the financial sun!
Following that initial meeting, a plan will be put together to pay off your debt in a window of anywhere from 30 to 60 months.
It may involve you authorizing your counselor to take over monthly payment of your debts on your behalf with the money you supply them. That, of course, involves trusting someone else to pay your debts on time and not further harm your credit.
In the end, it’s probably a calculated risk worth taking if you’re in debt up to your eyeballs — provided you make sure you’re working with an accredited NFCC affiliate.
4. What is a debt-management plan?
With a debt-management plan, NFCC affiliates use their industry position and relationship with creditors to get them to modify the terms and conditions of their repayment policies on your behalf.
In practice, that means lenders may waive late and over-the-limit fees, and possibly reduce your interest rates. Of course, the NFCC can’t work magic; don’t expect to get a reduction in the outstanding balances you owe!
Not everyone will qualify for a hardship debt-management plan, but it’s worth asking if you meet the qualifications. If you’re approved, your creditor will likely shut down or suspend your credit line. That forces you to go to a cash-only lifestyle, which is better for you in the long run.
And here’s a warning because we want you to go into this with eyes wide open: You should expect that there will be short-term damage to your credit score when you’re on a debt-management plan because you’re not paying your creditors as originally agreed.
Your credit counselor will be able to explain the exact short-term impact to your credit.
But here’s the thing: Once you’re back up on your feet, you can explore reestablishing credit in a responsible way. So by taking some short-term pain on your credit history, you can get long-term gain.
Here’s another way to think about it: Chances are, if you’ve reached the point where you need to reach out to the NFCC, your credit is already ailing. If you haven’t been able to fix it on your own, you likely need some outside help.
5. The NFCC offers more than just credit counseling
Credit counseling and debt-management plans are the bread and butter of what NFCC affiliates do. But there’s so much more that member agencies offer.
NFCC affiliates also specialize in student loan help, first-time homebuyer assistance, small business owner financial guidance, foreclosure prevention, reverse mortgage help and bankruptcy guidance.
You can even contact an affiliate to have an overall review of your budget and finances.
6. Special help is available for military members and their families
Unique among NFCC affiliates is a group called Clearpoint. This non-profit credit counseling organization take a special interest in returning members of our military who are transitioning back into civilian life after service.
The Clearpoint ReConnect program gives military members and their families access to certified military counselors who can help you create a family budget, start a debt management plan, become a homeowner, avoid foreclosure or just get your finances in order.
As with all services from NFCC affiliates, Clearpoint ReConnect does what it does either for free or at very low cost.
Additional ReConnect freebies include a series of off-base military housing podcasts, a monthly newsletter and a comprehensive Financial Field Manual for military families that’s done in conjunction with the BBB Military Line and Kiplinger’s Personal Finance.
There are Clearpoint locations in nine states — California, Florida, Georgia, Massachusetts, Missouri, New York, North Carolina, Oregon and Washington.
Contact your local affiliate of the National Foundation for Credit Counseling
The NFCC makes contact easy. Just visit them online at NFCC.org or call 800-388-2227 today!