Starting out any new year is always a good time for making commitments and resolutions. Many times we are successful, and at other times not so much. But it is important to keep trying to reach the desired goal. For example, if you are in debt, even if it is a little debt and struggling to see how you can get out of it, turning to debt consolidation resources that are close to home can help you succeed. Eliminating debt should be a top priority when it can jeopardize your financial future. There are many ways you can eliminate or reduce your debt.

Start by developing a budget. A budget is a blue print that lets you take control of your financial situation. The challenge is to do a realistic budget of how much money you take in and how much money you spend.

Second, don’t wait until your accounts have been turned over to a debt collector.

Contact your creditors immediately if you’re having trouble making ends meet. At Chelsea State Bank, we have advisors who will work with you to help you get through a difficult period. Let us know why you are having a debt or payment problem, and we will try to work out a modified plan that reduces your payments to a more manageable level, leading you out of your debt problem.

In addition to assistance that we can provide at Chelsea State Bank, here are some other Michigan-based debt consolidation resources that can be helpful to get your personal debt under control.

Consider Credit Counseling Assistance

Credit Counseling agencies will advise you on the best ways to manage your money, and offer solutions to current financial problems. An important component of their assistance is help you develop a personalized plan to prevent future financial difficulties. Credit counselors do not collect money from you or disburse funds on your behalf to your creditors. These counselors may not collect money upfront or before their service is rendered.

Most reputable credit counselors are non-profits and offer services through local offices, online, or over the phone. If possible, find an organization that offers in-person counseling. Michigan State University Extension Services is a good resource that operate non-profit credit counseling programs.

Be cautious when getting outside assistance to help. A nonprofit status doesn’t guarantee services are free, affordable of even legitimate. Avoid any debt relief organization that:

• Charges any fees before it settles your debts or enters you into a debt management plan
• Pressures you to make “voluntary contributions,” which is really another name for fees
• Touts a “new government program” to bail out personal credit card debt
• Guarantees it can make your unsecured debt go away
• Tells you to stop communicating with your creditors, but doesn’t explain the serious consequences
• Tells you it can stop all debt collection calls and lawsuits
• Guarantees that your unsecured debts can be paid off for pennies on the dollar
• Won’t send you free information about the services it provides without requiring you to provide personal financial information, like your credit card account numbers, and balances
• Tries to enroll you in a debt relief program without reviewing your financial situation with you
• Offers to enroll you in a debt management plan without teaching you budgeting and money management skills
• Demands that you make payments into a debt management plan before your creditors have accepted you into the program

Understanding Your Debt Consolidation Options

Whether you are looking for a credit counseling, debt management, or a debt settlement company, understand there are differences between them. A credit counselor is not required to be licensed and they cannot collect money to pay a consumer’s debt.

Debt management companies are required to be licensed and both the company and the consumer can make payments to the creditors. To find a licensed debt management company in your area, visit the Department of Insurance and Financial Services (DIFS) website to search the company database.

Debt settlement companies are required to be licensed to work in Michigan. Consumers are required to make deposits in a special savings account whereby the company will then make payments to the creditors. Before doing business with any debt settlement companies, contact the Michigan Attorney General’s Office, and they can tell you if any consumer complaints are on file about the firm you’re considering. Ask the Attorney General’s Office if the company is required to be licensed to work in your state and, if so, whether it is licensed.

Be Cautious in Making Your Debt Consolidation Choices

Use caution when shopping for debt relief services. If you have a complaint about a credit counseling agency or a debt settlement company, contact the Michigan Attorney General’s Consumer Protection Division at 877-765-8388 or complete an online complaint form. If you have a complaint about a debt management company, contact the Michigan Department of Insurance and Financial Services (DIFS) at 877-999-6442 or obtain an online complaint form.

Another area to be cautious comes from so-called credit repair companies. Many companies appeal to people with poor credit histories, promising to clean up their credit reports for a fee. But anything these companies can do for you for a fee, you can do yourself – for free. You have the right to correct inaccurate information in your file, but no one, regardless of their claims, can remove accurate negative information from your credit report. Only time and a conscientious effort to repay your debts will improve your credit report.

The Federal Credit Repair Organization Act regulates the credit repair companies nationwide. By law, credit repair companies cannot:

• Make false claims about their services
• Charge you until they have completed the promised services
• Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees
• Note: Accurate, negative information will remain on your credit report for seven years; and bankruptcy information remains for 10 years.

If you have a consumer complaint about a credit repair company, contact the Federal Trade Commission (FTC) at 877-382-4357 and the Consumer Financial Protection Bureau (CFPB) at 855-411- 2372.

The federal Fair Debt Collection Practices Act dictates how and when a debt collector may contact you:

• Debt collectors may call you between the hours of 8 a.m. and 9 p.m.
• They may not call you while you are at work
• They may not harass you, lie to you, or use unfair practices when they are trying to collect a debt from you
• They must honor a written request from you to stop further contact (this should be sent certified mail)

If you want more information or have a consumer complaint, contact the Federal Trade Commission (FTC) at 877-382-4357, the Consumer Financial Protection Bureau (CFPB) at 855-411-2372, or the Michigan Department of Licensing and Regulatory Affairs (LARA) at 517-241-9288.

All loans are subject to approval.