On the Money: Finding help for debtor daughter

Friday, July 02, 2004
By Patricia Sabatini, Pittsburgh Post-Gazette

Q: My daughter recently moved back in with me with major credit card problems. She owes $8,400 on one and $2,000 on another. She had to quit her job in the New York City area as she could no longer afford to live there; thus she is now unemployed. We need to locate someone who can help with debt management. I have heard the commercials that indicate they can consolidate into one payment. Please help us find someone we can talk to.


A: A good place to start is the Consumer Credit Counseling Service of Western Pennsylvania, which has an office near you in Butler at the Pullman Commerce Center on Hollywood Drive.

The organization offers free counseling sessions in person or over the phone, plus debt management programs for a fee. During the free session, a counselor will evaluate your daughter's debts, expenses and income, and go over the basics of a debt reduction plan.

The counselor also can review the pros and cons of debt consolidation loans. Keep in mind that these loans can be dangerous for chronic spenders who, as soon as their credit cards are freed up, start running up big bills again, digging themselves into an even deeper hole.

Since your daughter is unemployed, I'd be surprised if she could get a debt consolidation loan unless you agree to co-sign for it. In that case, you'd be financially responsible to make the monthly payments if your daughter couldn't keep up.

You also should know that unscrupulous lenders are lurking out there who prey on people overwhelmed by debts or struggling with poor credit. They may try to dupe you into a debt consolidation loan that actually ends up costing you more than you're paying now because of hidden fees and other costs.

If your daughter decides to sign up for the counseling service's debt management program, the agency will work up a repayment plan designed to retire her debts in five years or less.

The advantage of working with the counseling service is that the group can help you pay off your debts sooner by working out special concessions with creditors, such as lowering your interest rate or eliminating late or over-the-limit fees. In addition, when you're accepted into a debt management plan and start making regular payments, creditors will take your account off delinquent status, which stops collection agencies from hounding you.

Counseling service clients have two options for making monthly payments: have them automatically withdrawn from a checking account, or mail a cashier's check or money order to the agency, which will forward the money to creditors.

To join, there's a setup fee of $45, plus a monthly maintenance fee ranging from $5 to $35 based on the size of your debts. Since your daughter owes more than $7,000, the normal fee would be the maximum $35 a month. But because she's unemployed, the agency probably would waive the charges until she got back on her feet and found a job, according to Caryn Bilotta, director of education for the organization.

You can contact the Consumer Credit Counseling Service at 1-888-511-2227, or visit its Web site at www.cccspa.org.

In any case, debt counseling won't do your daughter much good unless she makes a serious commitment to change her lifestyle and stop overspending.

Help for home buyers

The Mortgage Bankers Association has launched a Web site to help guide consumers through the often-confusing home-buying process.

Topics include understanding the basics of home buying, finding the right home, deciding how much you can afford and shopping for a mortgage. Visitors also can ask questions online through the site's "Ask an Expert" feature.

Check it out at www.homeloanlearningcenter.com.







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