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You've probably heard the ads: debt counselor programs that promise to work with your creditors to reduce your monthly payments.They can help, but if you're not careful, you could end up paying more and getting into even deeper debt. 
In November 2001, Cheryl Simmons from Coatesville, Pa., was ready to deal with her debt. She called a nonprofit debt consolidation program for help."They took my information by phone, then they had me fill out all the forms they sent me in the mail," Simmons said.Simmons sent in her payments, and thought she was on her way to becoming debt-free."Next thing you know, four months later, I have a constable knocking on my door," Simmons said.It turns out the monthly payment the debt consolidator told Simmons to pay wasn't enough for one of her creditors, and the creditor was going after her."At this point I am going to court and I am going to fight because I did nothing wrong," Simmons said.With late fees, lawyer fees and court fees, Simmons was in even more debt.Here's what you need to know before you sign up for a debt-consolidation program.First, find out what all the fees are."A lot of agencies out there right now, your first payment is a fee to them, (so) if your first payment is $300, that's a pretty big fee," said Patty Hasson of the Consumer Credit Counseling Service."And typically, that's not the only fee," Hasson said."Many agencies out there charge $7 a creditor," Hasson said. "Keep in mind --six or seven creditors -- that could be $50 a month."And find out what kind of counseling you'll get."Is it a full-budget session where we go through all your debts, your income?" Hasson said. "More importantly, can you make these payments?""Just like you would shop for a bank, shop for a credit counselor," Hasson said.Why? Hasson said all credit-counseling services get the same discounted interest rates from credit card companies, so you shouldn't pay one program hundreds more if they all will get you the same deal."Make sure you get that reduced interest and that the fees are waved," Hasson said. "You can't just get that statement and put it in a drawer, you really have to look at it."
In November 2001, Cheryl Simmons from Coatesville, Pa., was ready to deal with her debt. She called a nonprofit debt consolidation program for help."They took my information by phone, then they had me fill out all the forms they sent me in the mail," Simmons said.Simmons sent in her payments, and thought she was on her way to becoming debt-free."Next thing you know, four months later, I have a constable knocking on my door," Simmons said.It turns out the monthly payment the debt consolidator told Simmons to pay wasn't enough for one of her creditors, and the creditor was going after her."At this point I am going to court and I am going to fight because I did nothing wrong," Simmons said.With late fees, lawyer fees and court fees, Simmons was in even more debt.Here's what you need to know before you sign up for a debt-consolidation program.First, find out what all the fees are."A lot of agencies out there right now, your first payment is a fee to them, (so) if your first payment is $300, that's a pretty big fee," said Patty Hasson of the Consumer Credit Counseling Service."And typically, that's not the only fee," Hasson said."Many agencies out there charge $7 a creditor," Hasson said. "Keep in mind --six or seven creditors -- that could be $50 a month."And find out what kind of counseling you'll get."Is it a full-budget session where we go through all your debts, your income?" Hasson said. "More importantly, can you make these payments?""Just like you would shop for a bank, shop for a credit counselor," Hasson said.Why? Hasson said all credit-counseling services get the same discounted interest rates from credit card companies, so you shouldn't pay one program hundreds more if they all will get you the same deal."Make sure you get that reduced interest and that the fees are waved," Hasson said. "You can't just get that statement and put it in a drawer, you really have to look at it." Distributed by Internet Broadcasting Systems, Inc. This material may not be published, broadcast, rewritten or redistributed.
