Credit Counciling?
 

My 28 year old son is in desperate need of some help with his finances. I have tried to advise him as best I can but hey, I'm Dad and he doesn't seem to listen to my advise. Plus I am less than qualified. He knows he needs help and is open to working with a credit counselor but who to turn to? If it makes a difference we are in SE PA. Is this a good starting point... National Foundation for Credit Counseling

What is presently happening sounds good Steve. Make sure you don't weaken and give him cash.

It's good to know the value of a dollar; meaning how hard you have to work at KFC to earn a dollar.

is it credit card spending sprees or balancing the checkbook?

dunno how savvy he is but best way i started was to literally take my last month's paycheck, put it at top of excel spreadsheet and then deduct everything i bought in the last month from burgers to gas station to toilet paper. from there it was easy seeing which expenses were the big ones. for me it was going out weekends and car parts (duh).

He's in over his head with a car payment he can't afford, higher rent than he had and student loans. He got a promotion at his job which required a move to a more expensive apartment and ignored my advice to plan out a budget he could stick to.

The bank holding his car loan refuses to work with him so he's looking at selling the car privately and buying cheaper wheels.

The student loans are through City bank and they are not willing to consolidate or work with him. I'm hoping that a credit counselor can advise him on where to go from here.

Only legit credit counselor I've heard of I actually went and spoke to. They have contractual agreements that let them consolidate all bills (not sure if student loans are included since i've never had any) and then they disbursed payments. They were usually able to get reduced interest and minimum payments as well. Get Immediate and Confidential Non-Profit Debt Counseling, Debt Help and Financial Education | GreenPath Debt Solutions

I ended up not using them, but they were honest - or at least gave me good information - and cheap at one $50 payment for them, any other money after that went to debts owed. The guy spent a few hours working with me, no charge, and gave me some good info for me to use on my own which has helped tremendously...

Sorry he is so far away Steve. I wish he could hang out at my pawn shop and learn by the mistakes of others.
Jim

I have not heard of a single credit counseling service that did not have a significant number of consumer complaints. This is propapbly due to the fact that by the time someone goes to a service they are not in a position to add any new expenses to their budget, and every one of these services charges a fee (greenpath is quoting up to $50 per month).

He needs to spend some time developing a cash flow budget, determine where he can cut back, work another job to increase cash income etc, this is the only answer. It is hard work, but can be done. If the car is upside down see about giving it back, move to a cheaper apartment, etc.

I have counseled many prospective clients on debt issues. I have not charged these individuals, as i could not help them longterm, and explained to them that I could not take them on as clients, as i also need to make a living. I would spend time to show them how to manage a budget, they can only help themselves. The biggest issue is understanding wants vs needs.

My 0.02.... Go to Dave Ramsey Homepage - daveramsey.com and find a local group doing the "Financial Peace" study or you can attend the class online. Lotta truth and good advice in his class. Then jump in on baby step number one and get gazelle intense for a while.

Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan - daveramsey.com

Thanks guys. Appreciate the help!

be careful - many credit counselor firms are essentially scams; they set up a non-profit, then charge exorbitant fees to consolidate payments and counsel people to pay on time, etc.

your state consumer protection office should be checked to vet any firms

Close. They're ALL scammers. Even the one called catholic credit counseling. If it were my son I would cash out his debt and put him on a plan to pay me back. One might even get a discount on the balance or cash.

How are these linked?

A great number of these counselors are really back buy credit card companies. The other issue is that student loans area a huge weight around the neck of MANY graduated and those that haven't graduated yet. At least he's working so he has an income. Hard lessons learned at a young age. Don't give a drunk a drink but so make sure he eats and has necessities.

Does he have a home budget? It's not rocket science, it sounds like either the car or the apartment need to go.

What is he asking the bank to do on the car loan? My guess is that selling the car privately will land him with similar debt and a crappy car. What are the numbers?

The job is 1 1/2 hours away in an area with much higher rents.

Here, let me try and see if I can through to him:

CUT UP YOUR FREAKING CREDIT CARDS AND STOP SPENDING MONEY YOU DON'T HAVE!

Don't know if that'll help or not but at least I gave it the effort .........

Back about the time I turned 30 I was in deep credit problems. I was stuck with a mortgage that was 12.5% which was a good rate at the time. I was single and buying a house is difficult for one income.

I talked to a credit council place and they suggested bankruptcy. :eek: I was not going to do that. They were my bills no one forced me into stupid decisions.

It took me 9 years of working extra jobs and no vacations and no extras but I was debt free shortly after my 40th birthday. Everyone got paid except one credit card company that was impossible to work with. It was just $400 but I did not pay them just because they were total jerks.

When we bought our current house we paid over 1/2 down. We paid it off in 11 years. No more debt for me. It will have to be some smoking hot deal on some prime property to make me borrow money again. I learned a hard lesson about debt.

I hope your son learns the same lesson.

Many of the credit "counselling" services are really bankruptcy firms, and a proposal is NOT the road to go down at 28 years old. If he were 16, maybe, because it'd be wiped from his record before he really needed credit. But in the next 5-10 years he's going to be looking for a mortgage, most likely, and BR will destroy that, at least at a reasonable rate.

Around here there are several non-profit, legitimate credit counselling firms. They're regulated, and separate from the bankruptcy trustees. Maybe there's something similar in your area? Some churches also offer a similar service.

Sounds like he basically understands what he needs to do, though. Getting out of the car payment is the best thing, and selling privately and buying a cheaper car is definitely the best start. The bank doesn't want to repossess - they'll lose money. But a repo will hurt him more - they won't rest until they recapture any losses, which means the repossession and subsequent actions will stay on his credit file until it's all done with, then drop off at the required rate (here it's 3 years for repo, I believe, 1 year for other activity, IIRC).

If he has that basic handle on what he needs to do, there's not much a credit counselling service can do for him, aside from a formal proposal which is halfway to a BR, and will drag his credit score way down.