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Q: I’m a 22-year-old college student who has racked up almost $8,000 in credit card debt. I honestly have no way of paying these bills in a timely manner. Instead of filing for bankruptcy, I would like to consolidate my bills with a consumer credit counseling service. Can you refer some well-known and trusted agencies?
–J.J. Jackson, Via the Internet
A: You should know that the debt-consolidation process can take several years, but you can start the process now. In many ways it is a good exercise in disciplined spending and budgeting.
The first steps are to stop using the cards, and then develop a budget to understand what you’re actually spending, where you’re overextending yourself, and what you actually owe. Determine what you’d like to refinance and make an appointment with your bank to propose how you will make future payments. You also have the option of switching banks if yours is not receptive to your plan.
If that task becomes overwhelming, your biggest assignment will be to find a reputable company that will put together the best possible plan. There are several options including credit counseling; balance transfers; and consolidation loans, which in some instances can cost you more in the long-term. Members of the Association of Independent Consumer Credit Counseling Agencies (800-450-1794) and the National Foundation for Credit Counseling (www.nfcc.org) are among the most reputable. The former caps enrollment fees for debt management; members of the latter are charged less than $20.
Mail your consumer empowerment questions to Ask Your Advocate, BLACK ENTERPRISE130 Fifth Ave., New York, NY 10011or send an e-mail to email@example.com.