These frequently asked questions can help you understand the impact of joining a debt management program.

Does credit counseling affect my credit?

Yes. Our goal is to improve your current credit situation. We want to help you bring all accounts to a current status, lower your balances and improve your debt-to-income ratio. The single most important action you can take to strengthen your credit score is to become current on all accounts. Once we have helped you pay off your balances, your credit score will likely improve, and you may once again pursue additional credit responsibly.

Note this comment posted on the website for the U.S. Department of Housing and Urban Development (HUD):

“The position of HUD/FHA on Consumer Credit Counseling is neutral. It is to be viewed as a part of the total credit history for the last year. If the borrowers are participating in a Consumer Credit Counseling program, have they been adhering to the agreement?”

Could a debt management program still hurt my credit?

Some debtors find themselves in the situation where they are able to routinely meet their minimum payments, and often pay more than the minimum payment requested. However they still would like to pay them off faster. If this sounds familiar, then you would not qualify for a debt management program because your participation could reduce your credit score.

If you have been late, then chances are your credit has already suffered. If you know that you will fall behind this month, you may wish to seek help before your situation becomes out-of-control.

What types of benefits could I receive on a debt management program?

Each creditor has its own guidelines and range of benefits that it is willing to offer to someone on our program. Some benefits include reduced or waived (eliminated) interest, waived late or over-the-limit fees, lower monthly payments, and a reduction in collection calls. Depending on the benefits that we are able to negotiate for you, you could typically pay your debts off in as little as 3 to 5 years.

Can I apply for new credit once my accounts are paid in full?

Yes. We encourage that you do so responsibly though!

Will my creditors continue to send me statements?

You will continue to receive statements from your creditors. You should review these each month to see how well you are doing on the program. Remember that disbursements from your debt management program will show as payments on your creditor statement, so no additional payment is necessary once your accounts are current again with the program.

What if I decide to end my program before my debts are paid?

A debt management plan is a voluntary program, and you may leave at any time without penalty. We encourage you to remain consistent with your payments until they are paid in full. PFNI is willing to help you regain your financial freedom, and we work hard to help you successfully graduate from the program.

If I find that I am able to pay more than my minimum payments, may I do so?

You may increase your payments, and we encourage you to do so if your situation improves as it will allow you to repay your debts faster. Remember that some interest usually remains on most accounts, so you can still save money by paying them off faster. Once you have made three consecutive payments through our program, and you are comfortable with your new payment, simply give your dedicated account adviser a call to discuss more options.

How do I decide which credit counseling agency is right for me?

Make sure that you know exactly how each agency’s program works. You may wish to ask some tough questions, such as:

  • “Do you keep my first month’s payment?”
  • “Are there any setup fees?”
  • “Do you charge monthly fees?”¬†Credit counseling agencies do have expenses, so find out how they meet those expenses. A reputable agency will be happy to explain how they are able to provide their services.