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Learn... Plan... Take Action... Eliminate Debt!

Steps to Build Debt Elimination Plan
  Step 1 - Assess the situation
  Step 2 - Analyze your spending
  Step 3 - Identify ways to reduce spending
  Step 4 - Develop the plan
  Step 5 - Take action
  Step 6 - Monitor the results
  Step 7 - Get help if needed
Calculators
  Debt payment
  Debt evaluation
  Interest payment
Tools
  Debt worksheet (pdf)
  Debt worksheet sample (pdf)
  Debt worksheet (xls)
What to expect from CCCS and similar organizations

There are a lot of organizations that want to help you get out of debt. You've seen the claims on TV and the Internet. They will negotiate with your creditors and reduce the interest rates.The best known nationwide credit counseling service is the Consumer Credit Counseling Services (CCCS). It bills itself as a non-profit debt counseling service and has provided much-needed advice to those in serious debt. CCCS, and other organizations like it, develop debt repayment programs. (If you are in serious debt, read Nine ways to pay off debt.)

Here's how it works: If a debtor's situation is dire enough (they accept only the hardest-luck cases), CCCS will help develop a debt repayment plan for a reasonable monthly fee, which could be as high as $50 based on your overall debts and income. (Should you use the services of a for-profit organization, do not use one that asks for a large up-front fee.) CCCS contacts your creditors on your behalf and gets them to lower monthly payment requirements and either notch down interest rates or do away with them altogether. Why the generosity? Creditors don't want you declaring bankruptcy and defaulting on the debt altogether. And since CCCS is largely funded by "the credit industry", they will discuss numerous options with you, but they'll never mention bankruptcy.

Some customers have nicknamed CCCS the "Credit Card Collection Service," saying the organization is more concerned with getting the creditor paid quickly than insuring that the debtor has enough monthly income on which to live. The debt repayment plans they peddle encourage customers to turn over their paychecks each month for CCCS to dole out among creditors. The organization decides whom to pay and how much.

Listen to their advice, adapt it to your needs, but never hand over control of your monthly income. In many instances you can negotiate lower rates on your own. But if your creditors number in the double digits, you may find it exceedingly difficult to get all of them to lower interest rates or work out an acceptable payment schedule. That's where the services of CCCS can come in handy. It has relationships with nearly all unsecured creditors and can usually negotiate lower rates.

If you do sign up for a debt-repayment plan from CCCS or any other organization, follow through. Should you renege on the plan, it can show up as uncollected debt on your credit report for seven years -- a red mark almost as bad as bankruptcy.