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Are You Credit Worthy?

GETTING OUT OF DEBT !
By Wilma J. Camacho

Are you in a financial emergency? Are you experiencing any of the following situations: You are living from paycheck to paycheck, you can only make the minimum payments on your credit cards, you juggle your bills and always try to catch-up, you are unable to save any money, you need to borrow to pay expenses such as food and utility bills; your creditors are calling you because you are late with payments? If any of these danger signs sound familiar, then you need assistance to become debt free.

According to the National Foundation for Consumer Credit, the primary cause of financial problems is poor money management, and about 46 percent of people agree they have this problem. Their average number of creditors are 11, and their average total debt is $19,688 with an average monthly gross income of $2,000.

Between 1990 and 1996 credit card debt doubled to more than $400 billion. Most credit card users find it practical to charge without noticing how much they are spending. Later, they find themselves in financial difficulties. This is the case of Sonia Gomez who used to make a lot of purchases with her credit cards. "To me it was easy to shop with plastic. At first, it did not look like I was spending any money. But, whenever I got those bills I realized I spent more that I could afford."

In order to avoid future financial problems experts suggest to use credit wisely by learning more about good credit management. Organizations such as the National Foundation For Consumer Credit can help. The NFCC was founded in 1951 and it is the nation's oldest and largest non-profit agency dedicated to provide credit education and counseling. At NFCC consumers are able to receive confidential money management and educational services. There are about 1,450 counseling offices offering free or low-cost services in the United States, Puerto Rico and Canada. In 1997, NFCC members counseled a million families helping them to control their finances. Likewise, NFCC educators reach each year more than three million people through presentations at elementary and high schools, churches and civic groups.

The Consumer Credit Counseling Service, an umbrella organization of NFCC, also provides professional programs of consumer credit education, confidential counseling and debt reduction. CCCS is a non-profit community service organization established in 1966 to help people prevent and solve personal money management problems through their programs. There are more than 1,300 CCCS offices located in the U.S., Canada and Puerto Rico. CCCS is not to be confused for a lending institution or a collection agency. CCCS provides a viable alternative to bankruptcy, when appropriate. Programs such as the Debt Management Plan is intended to help the consumers repay their debts.

The services provided by CCCS are free, confidential and can be done either in person, by telephone or my mail.

DEBT MANAGEMENT PLAN
Through DMP consumers can repay their debt, instead of filling for bankruptcy, CCCS acts as the mediary between clients and the creditors. DMP works like a debt consolidation process. First a counselor determines how much money you have available to pay your debts, then based on this information a repayment plan is set-up just for you. Finally, the creditors are contacted to request their cooperation. There are creditors that are willing to waive or reduce interest charges for clients allowing them to catch up quickly.

CCCS EDUCATION DEPARTMENT
This department offers at no cost money management workshops to community groups, schools and employers. Some of the topics include: "The Wise Use of Credit" (Taught in English and Spanish), provides information about using credit, common practices of creditors, steps to follow to reduce or eliminate debts, and how to obtain, read and correct items in credit reports. "Surviving a Layoff or Paycut" (Taught in English and Spanish): This workshop shows participants how to best handle their finances during the transition period of a layoff or paycut. "Budgeting and Money Management" (Taught in English and Spanish): Covers all the steps and details for establishing and maintaining an effective personal budget. Participants learn how to develop a monthly budget and a personal spending plan. Other educational workshops available to the public are "Raising a Money-Smart Child", " Seniors and Money," "Time and Stress Management and Goal Setting."

HOUSING AND URBAN DEVELOPMENT
This department offers free six-hour workshops to educate homebuyers regarding prepurchase decisions and default prevention. Through HUD's individual counseling and the workshops, people can learn about budgeting, credit, the loan process and real estate terminology.
The Hispanic Credit Education Campaign
Last March, the Consumer Credit Counseling Service took the leadership in a campaign targeting the Hispanic community in Los Angeles. The Hispanic Credit Education Campaign is a alliance of lenders, merchants and financial institutions with the objective to promote the wise use of credit, and to provide alternatives to bankruptcy through education, personal finance counseling and debt management programs.

The Campaign's spokesperson and founder, Hector Perez, said "A core value of the Hispanic culture is economic progress and self-sufficiency. Many new immigrants, as well as second and third generation families, want to own their own home; to have the ability to finance their child's college education, and start their own business. But the ability to achieve these goals can be threatened by the lack of understanding or misinformation regarding the role good credit plays in the financial system in the United States." Perez continues: "When Hispanic families encounter financial difficulties, they too often and too quickly turn to bankruptcy, even for relatively minor credit problems."

The partner's in the Campaign recognize that consumers often don't realize or understand the long-term impact bankruptcy has on their credit.

"This alliance is the first of its kind in the country" said Congressman Esteban Torres, a supporter of the Campaign. "It is not just another government program, rather, it represents an investment by concerned lenders who have a stake in the health and vitality of the Hispanic market. By the same token, services provided through the Campaign will help the Hispanic community in Southern California achieve their full potential. It is my hope that this pilot program can be replicated in other areas of the country."

The goal of the Hispanic Credit Education Campaign is to increase awareness in the Hispanic population about the importance of good credit and to provide alternatives to bankruptcy through personal financial counseling and the establishment of individualized debt management plans.

In conclusion, it is also important to understand that credit is not such a terrible thing. Credit can open many doors for us, like renting or buying a home, buying a car, or during an emergency. However, we need to use credit wisely to avoid turning an advantage into a disadvantage by overspending. Expert suggest that good credit management begins with keeping one or two credit cards; limiting charges to 20 percent of your annual income; and trying to pay off the cards balances in full every month.

If you are in financial trouble and need help, please call the National Foundation for Consumer Credit, toll-free, 24 hours a day: (800) 388-2227 in English. Spanish-speaking consumers can call (800) 682-9832. Consumers can learn more by visiting the NFCC web page at http://www.nfcc.org. To reach the Consumer Credit Counseling Services call: (800) 750-CCCS (2227) and you can visit the CCCS web page at http://www.ccsla.org
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