Ask The Get Out of Debt Experts Credit Counseling

My Parents Sent Me to CreditGuard of America. – Ray

“Dear Steve,

I’m a freelance photographer. I was laid off from my job in 2008 and started freelancing shortly there after, as well as assisting another photographer. I moved in with a friend but was unable to pay him rent for the first 8 months or so. I owe him for that ($4500 approx).

As the economy got worse and worse, both my income and the income of the other photographer I was assisting dwindled. I have since taken a part time job, but had to live almost primarily on credit cards for several months and have now maxed out all of my available credit.

My parents sent me to creditguard.org to see if I could get some relief. They are saying they can save me $141 per month on payments, and $16,660.04 in interest over the period of repayment.

I’m worried about doing this as I’ve heard so many horror stories of consolidation/relief companies screwing over their client. I had a friend who was sending her payments and the company wasn’t paying her creditors at all.

I tried to call them and get information and they were quite pushy about getting my information, including account numbers so they could try and give me an estimate, but even after I told them I was merely getting information so I could evaluate my options they still tried repeatedly to get me to sign up.

Is this company a safe “investment”? (They want a one time $75 membership fee…)

Thanks!

Ray”

Dear Ray,

CreditGuard is a nonprofit 501(c)3 organization recognized by the IRS. CreditGuard offers a traditional credit counseling or debt management program. I’ve known of them since 1994 so they’ve been around quite a while.

Ultimately the decision to use a credit counseling program will come down to your ability to afford the monthly minimum payment and be able to continue those payments for five years or so. You may want to read The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.

READ  IRS Yanks Nonprofit Status of Credit Counseling Agencies

I’d put CreditGuard in the same bucket with other mainstream credit counseling organizations and I’d be surprised to learn that it was CreditGuard that was not sending payments on a timely basis, if that was the group your friend used.

Regardless, since you are not able to make your minimum payments off your income and you were using credit just to get by on the basics, I can’t see that a credit counseling solution makes logical sense unless you can easily afford the minimum payment.

Instead you should probably think about bankruptcy. You can click here to find a local bankruptcy attorney and go talk to them.

You need to know that with either bankruptcy or credit counseling, your credit cards will be closed and you will not be able to live off of them anymore. This is another reason I think bankruptcy makes logical sense. If you decide to go bankrupt you would then be able to save money each month in an emergency fund to protect yourself when the next financial surprise happens. And it will, they always do. With the credit counseling approach your current expenses plus the credit counseling payment will probably not leave you as much room to save and buildup that emergency fund.

After bankruptcy you can easily rebuild your credit once things start to lookup for you. But the first step is to take care of this debt so you can focus on making the days better and get back to enjoying your photography.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

3 Comments

  • I’m trying to cancel credit guard after all the bad feedback I’ve been reading about them. Was there any cancelation fee? We already sign the contract and paid the first fee. Fortunately it’s been only 1 week and they haven’t taken the monthly payment yet, and we really want to cancel before we get in a deeper boat with this company.

  • Credit Guard of America sucks! They are very pushy, do not give correct information when giving the sales pitch to sign you up, they didn’t get my payment in by the due date, they were charging me more than the minimums on my cards, they took the money out of my bank account but wouldn’t disperse it to the creditors for 8 more days. They talk to you very condescendingly, as if you are totally uneducated. I cancelled my account before they even made one payment. Beware of the fine print and the sleezy salesmen!

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