In the past 10 years, the average credit card debt Americans carry has doubled. Today, the average consumer has a staggering $8,100 in credit card debt.

The frightening part is that this number is only an average. Plenty of consumers are making minimum payments on balances that are a whole lot higher. And many don’t realize that only making a minimum payment means it’ll take 28 to 33 years to pay off their credit card, says Mike Cole, executive vice president of CCCS Atlanta.

“Almost anything you can buy — except maybe real estate — would be used up, worn out or gone by that time,” he added.

When debt becomes financially overwhelming, some consumers think bankruptcy is the only solution. But that won’t take care of everything. Some debts, like school loans, are not wiped out by bankruptcy.

And for some consumers, it’s psychologically important to pay back what they owe.

The National Foundation for Consumer Credit, the parent organization of some 1,600 CCCS offices nationwide, offers a debt management and payback plan that is individually structured to meet each consumers need.

“Certified credit counselors can provide an objective review of your total financial picture — assets, debts, income and expenses,” said Cole. “They provide sound guidance, common sense advice and an opportunity for consumers to talk through their situation.”

Consumers have several choices, including bankruptcy, working directly with their creditors, additional budget counseling, a debt management plan, continuing to handle their financial situation on their own, and the pros and cons of each.

Cole says the best counselors provide encouragement and support over the next several years to help craft a realistic budget based on your needs, work through any emergencies or crises that may arise, and celebrate the successes that happen along the road to becoming debt-free.

Finding the right credit counseling program isn’t as easy as it sounds. First, all non-profit credit counseling companies are not equal – some do a better job than others. Some use technology to electronically withdraw funds from your account, and email to keep in touch, while other offices require you to come down to the office to make your monthly payments.

When interviewing a prospective counseling agency, Cole suggests consumers ask these questions:

  • Are the counselors certified by a reputable third party examination process? CCCS counselors pass six NFCC certification examinations. Certification measures experience and tests the counselor’s knowledge of credit and financial counseling. In some CCCS offices, many of the counselors have a minimum of a college degree.

  • Is the agency accredited by a reputable third party review process? Is the agency governed by a volunteer board of community representatives who have the consumers’ best interest at heart? Often, locally-known politicians, celebrities, and business leaders will be on the agency’s board of directors.

  • Is the agency financially sound, with outside audits of their operating and client deposit accounts? Ask who audits the agency’s books, and how the agency receives its operating budget. The answer should be grants, fees from clients and a percentage of the cash that is returned to creditors through the debt-management program.

  • Ask what fees you will be charged. CCCS Atlanta charges no fees for counseling or establishing a debt management plan. All contributions are strictly voluntary, though most people contribute something.

  • Are there quotas or incentives for counselors to sign up debt management plans? The answer should be “none.”

  • What are typical outcomes of a counseling session? Cole says one-third of the people who are counseled by CCCS Atlanta elect to enroll in a debt management plan, another third decide to use CCCS budgeting tips to manage their own finances, and the final third are referred to other assistance programs or to bankruptcy.

  • Ask how many people the agency counsels. CCCS Atlanta, one of the larger debt management companies, receives 1,000 phone calls a day from consumers seeking basic information. They conduct more than 60,000 initial consultations each year, and help 25,000 consumers pay back more than $250 million in debt.

But a debt management plan isn’t a magic pill that will make your problems go away, warned Cole. Debt builds up over time. While a counseling agency can help negotiate the interest rate or a payment plan, it will take some years to pay off that debt.

Finally, consumers are often confused by how using a debt management plan will affect their credit history.

Typically, you can take advantage of the debt counseling, budget counseling and homeownership classes without it having any impact on your credit history. But if you enroll in a debt management plan, that will be a negative mark on your credit history for some time, at least until you are through paying off your debt.

But make no mistake – having a bankruptcy on your credit history is far worse.

June 11, 2001.