A few years ago we touched upon the topic of problems paying bills. In that article we briefly mentioned Consumer Credit Counseling. That’s because it’s a free service, for the most part, that helps people set up payment arrangements to get rid of a lot of debt and takes a small percentage of it to help cover their costs so they can continue providing services for others.

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They’re the best known but there are other companies that can help you with this same type of thing. While accountants like us can help you set up a budget and help you manage your money, these companies have one specific goal, which is to help get you out of debt and keep you from adding onto it.

This is different than a debt consolidation company; let’s get this out of the way now. There are some reputable debt consolidation companies, but the majority of them are frauds. They tell customers that they’ll contact all of their creditors, and they do, but not until your credit report is ruined and you’ve gotten tired of all the phone calls. Within a year to 18 months after you’ve first reached out to them, that’s when they’ll call, make deals to pay your bills off at a discounted rate, and then keep a big percentage of it for themselves. But your credit will be wrecked for at least 7 years; no thanks to that!

With consumer credit counselors, you may end up paying some of them for different services, but they’re going to get you out of trouble without your getting deeper into trouble. Some will call all of your qualified creditors and try to work out deals with them. Some will help you set up a payment plan to get out of debt. There are different degrees that each service will offer you, and you need to be ready to pay for whichever company you sign up with.

The reason everyone doesn’t end up with Consumer Credit Counseling is that you have to qualify for them to represent you. This means if you make enough money to pay your bills based on their scale they’ll let you know that but probably won’t work with you. That’s a good thing because it means you still have a chance to take care of things on your own.

Here’s what’s going to happen once you qualify. They’re going to work with you on a budget; budgeting is important. They’re not going to make you stick to your budget, but you will have a specific goal in mind.

Initially, they’re going to contact all the creditors they can and work with them on a payment plan. It’ll mainly be credit cards, but they’ll try to talk to some of your other creditors also.

When they’ve got an agreement with all of them, you’ll have to sign an agreement to make a specific monthly payment, which will come directly out of your bank account. The amount will be the total of all the amounts agreed upon with your creditors and a small fee on top of that.

That’s why the budget becomes important. They’re going to do everything they can to keep you out of total financial difficulty so you can have money left over for things like food, gas and other things not covered under outstanding debt. They’re also going to work hard to get your liabilities taken care of sooner than later, and budgeting will be the easiest way for you to manage your money.

You also have to know that during this period you can’t use any of your credit cards. Even if you try, they’ll be frozen. Unfortunately, it’s possible that some of your creditors might cancel your card, but this is a rarity unless you’ve been delinquent so long that they already canceled it.

As we always advocate, it’s better to address issues like this instead of hoping they’ll go away… because they’ll never go away. Try calling your creditors first if you believe you can pay your bills with their help; these people want to keep you as a customer. If you start feeling the pressure when it comes to your bills and you’re not sure you have enough money to take care of it on your own, you should talk to some kind of professional to help you out. It’s always better to know where you stand.