A Suze Orman exclusive

There is plenty of help available if you can’t seem to get a solid grip on dealing with your credit card debt. But not all the help is good. Given that so many Americans are drowning in card debt, it’s really no surprise that some enterprising—and underhanded—folks have figured out a way to make money off of this epidemic by charging high fees for counseling and advice.

So you need to make sure you choose an honest and fair credit counseling service. Start by getting references from the National Foundation for Credit Counseling.

Next, make an appointment to talk with a counselor face-to-face. A good counselor will question you thoroughly and in detail about your financial situation before proposing anything. . If you are simply told right off the bat that you need a Debt Management Plan (see below), you should run out the door PDQ. That firm is not interested in truly helping you. They just want to hit you up with a bunch of fees.

A good counselor is also going to require that you attend education classes. This is not punishment! On the contrary, it’s the best help you can get. Quite often, you can make the changes necessary to take control of your credit card spending just by learning a few good habits.

Now, if you are in so deep you have stopped making payments, you may want to consider a Debt Management Plan (DMP). Your credit counselor will negotiate with your card issuers to set up an agreed-upon payment schedule. You will make one payment to your credit counseling agency, which will handle all the payments to your card issuers. Not everyone is eligible for a DMP; if your counselor doesn’t think the plan will result in you having your debts paid off in a few years, you won’t be allowed to sign on.
For those of you who qualify for a DMP, be extra careful that you know upfront every fee you will be charged. This is where some of those unsavory firms do their damage. You should pay a minimal start-up fee of just $25 or so, and your ongoing monthly service fee (which will be in addition to your monthly payment) should be lower than $20 a month. The average monthly fee charged by NFCC members is $14. Please don’t fall for a credit counseling service that charges you hundreds in an initial fee and/or steep monthly fees. And make sure you pay just one monthly fee; some of the worst agencies charge a fee for each of your credit card companies that they deal with. Obviously, get all the fees explained to you in writing before you sign anything. Taking control of your credit starts with understanding your repayment terms.