ANCHOR: WITH AS MUCH AS $8800 DOLLARS IN CREDIT CARD DEBT AND PERHAPS AS MANY AS 20 DIFFERENT LINES OF CREDIT OPEN, THE AVERAGE AMERICAN FAMILY HAS PLENTY TO WORRY ABOUT
ANCHOR: BUT THEY DON’T NEED TO WONDER IF THE CREDIT COUNSELING SERVICE THEY’RE USING TO HELP MANAGE THOSE DEBTS IS ACTUALLY PULLING A FAST ONE. WGN’S FINANCIAL REPORTER ILYCE GLINK IS HERE WITH SOME ADVICE ON HOW TO PAY OFF YOUR DEBTS WITHOUT GETTING SCAMMED.
ILYCE: THAT’S RIGHT, ALLISON AND STEVE. IN THE PAST FEW WEEKS, ILLINOIS ATTORNEY GENERAL LISA MADIGAN FILED SUIT AGAINST AMERIDEBT, WHICH OPERATED AS A CREDIT COUNSELING SERVICE AND DID A LOT OF ADVERTISING, BUT WAS ACCUSED OF NOT BEING LICENSED, NOT PAYING DOWN CONSUMER’S DEBT AND CHARGED OUTRAGEOUS FEES. IF YOU HAVE DEBTS AND WANT TO PAY THEM OFF, YOU SHOULD CHOOSE YOUR CREDIT COUNSELING AGENCYAgency is a term used to describe the relationship between a home seller and a real estate broker, or a home buyer and a real estate broker. CAREFULLY.
JESSICA LASHAWN WILLIAMS/COLLEGE STUDENT (IT’S LaShawn) “I GOT CREDIT CARDS FROM MY SCHOOL CAMPUS. CREDITORS CAME TO THE SCHOOL AND THEY OFFERED THESE CREDIT CARDS AND I USED IT TO HELP PAY FOR SCHOOL BOOKS, TUITION, UNIFORMS AND STUFF LIKE THAT.”
JESSICA LASHAWN WILLIAMS IS $3,000 IN DEBT. “I COULDN’T PAY THE BILL AND THE INTERESTInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. STARTED TO RISE OVER TIME. IT GOT HORRIBLE.”
SO THIS WEEK, WHILE ON SPRING BREAK, JESSICA TOOK SOME ADVICE FROM HER MOM AND SIGNED UP FOR A DEBT MANAGEMENT PROGRAM WITH CONSUMER CREDIT COUNSELING SERVICE.
JESSICA LASHAWN WILLIAMS: THEY TOTALED ALL MY DEBTS TOGETHER AND GAVE ME A COMMON PLAN THAT I CAN PAY IT OFF IN 3 YEARS.
ALFRED GUYTON/CREDIT COUNSELOR: “ONCE WE TAKE A LOOK AT THEIR INCOME, EXPENSES, UNSECURED DEBTS, WE’RE ABLE TO SIT DOWN AND THAT’S WHERE THEY GET THEIR FIRST REAL SHOCK. WHEN THEY REALIZE WHAT THE DEBT LOADA Load is a sales charge on a mutual fund that can range from 1 to 7 percent. It might be a front-load (payable when you buy into the fund) or a back-load (payable when you cash out). You typically pay this because you want the service of a financial professional selecting and building your portfolio. Your load may decrease the longer you hold the fund. If you cashed out in the first year, you'd pay 6 percent. Cash out three years later and the load may only be 3 percent. REALLY IS.”
A LEGITIMATE, NON-PROFIT CREDIT COUNSELING ORGANIZATION WILL THEN CREATE A WORKABLE MONTHLY BUDGET THAT FACTORS IN ALL THE EXPENSES YOU CAN EXPECT TO HAVE OVER THE COURSE OF A YEAR, INCLUDING PERIODIC EXPENSES, LIKE AUTO AND HOMEOWNERS INSURANCE.
CATHERINE WILLIAMS/MONEY MANAGEMENT INTERNATIONAL: “WE TRY AND INCLUDE HOME MAINTENANCE. WE TALK ABOUT UTILITIES. WE TALK ABOUT BIRTHDAYS, HOLIDAYS, LESSONS FOR THE KIDS. WE GO BACK THROUGH THEIR CHECKBOOK AND THAT FOR A LOT OF PEOPLE IS REALLY EYE-OPENING.”
AND THE CREDIT COUNSELING FEES, WHICH ARE STATE-REGULATED, ARE AFFORDABLE.
CATHERINE WILLIAMS: “$50 FOR THE INITIAL SET-UP FEE AND NO MORE THAN $30 FOR THAT ONGOING SERVICE FEE”
AND OFTEN YOU’LL PAY JUST $12 TO $15 PER MONTH FOR THE CREDIT COUNSELING SERVICE TO HELP YOU PAY YOUR BILLS. UNFORTUNATELY, IF YOU’RE UP TO YOUR EARS IN DEBT, , YOU MIGHT TURN TO THE INTERNET . . .
CATHERINE WILLIAMS, MONEY MANAGEMENT INTERNATIONAL: "IT’S STILL THE WILD WEST OUT THERE ON THE INTERNET.
AND INSTEAD OF FINDING A LICENSED CREDIT COUNSELING SERVICE, YOU COULD WIND UP CAUGHT IN A CREDIT REPAIR SCAM.
LISA MADIGAN, ATTORNEY GENERAL: “NOBODY CAN FIX YOUR CREDIT FOR YOU AND PEOPLE NEED TO KNOW THAT. YOU’RE THE ONLY PERSON WHO CAN FIX YOUR CREDIT, BASICALLY BY PAYING OFF YOUR DEBTS. AND IF SOMEONE SAYS TO YOU WE WILL FIX YOUR CREDIT, SIMPLY DON’T BELIEVE THEM.”
SO BEFORE YOU SIGN ON, CHECK OUT THE COMPANY WITH THE ATTORNEY GENERAL’S OFFICE AND THE BETTER BUSINESS BUREAU TO MAKE SURE YOUR DEBTS GET PAID ON TIME, AND IN FULL.
BELIEVE IT OR NOT, SOME CREDIT CARDS CHARGE UP TO 43 PERCENT INTEREST ON YOUR DEBT. AT THAT RATE, IT COULD TAKE YOU AS MUCH AS 33 YEARS TO PAY IT OFF ON YOUR OWN. A LEGITIMATE CREDIT COUNSELING SERVICE WILL RESTRUCTURE YOUR DEBT SO YOU PAY EVERYTHING OFF IN 5 YEARS OR LESS. FOR MORE INFORMATION ON VARIOUS CREDIT REPAIR SCAMS AND HOW TO AVOID THEM, TAKE A LOOK AT WGNTV.COM. ALLISON AND STEVE…….
NATIONAL FOUNDATION FOR CONSUMER CREDIT (WWW.NFCC.ORG)
CONSUMER CREDIT COUNSELING SERVICE (800) 227-CCCS (TOLL-FREE REFERRAL SERVICE)
MONEY MANAGEMENT INTERNATIONAL (WWW.MONEYMANAGEMENT.ORG)