Resolutions 2012: Finding help with debt

This post comes from Brandon Ballenger at partner site Money Talks News.

A new study from the National Foundation for Credit Counseling found that 62% of respondents said their top money goal this year is putting a dent in their debt.

If TV, radio, and Internet ads are any indication, there's no shortage of help to do it. Commercials promise all kinds of amazing things, from cutting your interest rates in half to settling your debts for pennies on the dollar.

Unfortunately, some of these outfits overcharge and deliver less-than-advertised​ results.  And top-quality nonprofit credit counselors don't bring in enough money to allow much, if any, advertising. In the video below, Stacy Johnson tells you what to expect from a trustworthy credit counseling group. Read on to learn how to find one.

Boil it down, and what credit counselors and others in the debt-busting business do is negotiate with your creditors on your behalf.  They let lenders know you're getting help, and try to negotiate lower rates and reduced fees. If you end up on a traditional debt management plan, you'll send the agency a monthly check, which they divide up among your creditors.

The traditional plan involves repaying your debts in full over three to five years. A prerequisite in most programs is forsaking credit cards entirely throughout the process.

But talking to a credit counseling organization doesn't require enrolling in a debt management plan. Quality organizations provide advice and assistance free of charge. So if you're in over your head, here's how to locate reliable help:

• Check accreditation. If you're going to seek help with debt, make sure those providing the help are genuine counselors, not salesmen. One way to do that is to ask whether their counselors are accredited. As Stacy said, one of the best accreditations is issued by the Council on Accreditation. You can find their list of accredited agencies, sorted by state, online. Other good sites to check: The National Foundation for Credit Counseling, the Association of Independent Consumer Credit Counseling Agencies, and the relatively new Association of Credit Counseling Professionals all allow you to search for member organizations.
• Check prices. As Stacy said, advice should be free. Even if you end up on a debt management plan, there should be no upfront fees, and whatever they do charge after the fact should be fairly low. The NFCC says: "Any set-up fee or monthly fee should be reasonable, usually defined as $50 or less, with monthly fees in the $25 range. The agency should be willing to waive all fees in cases of true hardship." If you find there's more than one reputable group in your area, you can compare rates.
• Ask questions. Besides credentials and cost, responses to some basic questions can be telling. Try these: Will your help hurt my credit history? What's the minimum debt you work with? How long are sessions? These questions and their answers come from the NFCC site, which has several more. A good agency will tell you that a lengthy session (an hour or more) may be necessary to hash out your income, expenses and debt. They'll offer to help with debts of any size, and to work with all of your creditors. They'll also admit that their help might show up on your credit reports, but won't hurt your credit scores. (Estimate your credit score for free.)

If the traditional credit counseling relationship doesn't sound appealing, you can always try to negotiate debts yourself. But when it comes to getting help with debt, you should expect an honest assessment of your situation and options at a price that doesn't add to your debt.

Watch out for groups that make big promises for big fees, and especially those that claim to settle debts for pennies on the dollar. They're usually too good to be true. Check out "Should you consider debt settlement?" and "Debt settlement industry defrauds consumers" for more on the risks.

More on Money Talks News and MSN Money:

• Most popular posts of 2011
• Broken heart, broken budget
• 5 credit card predictions for 2012
• Resolutions 2012: Learn to budget
• 5 tools to keep your resolutions on track
• 5 tax resolutions for 2012