I am in one called United Financial Services. I had to enter it a couple years ago to pretty much keep my head above water.
But time has passed and I am doing better financially. I would like to pay off my credit cards in the next few months in full. I know they warned me not to use them or make any payments on my own or I would get booted out of the program.
So if I do this, will UFS give me any difficulty leaving their program? Maybe in the form of fees or will they keep charging my bank account? And will it hurt my credit report to pay these off early?
I used a credit counseling service several years ago after getting in over my head, too. If you are ready to pay everything off, meet up with your advisor at UFS and tell them you are at a position to pay everything and would like to coordinate it through them. I’m sure you signed a contract in the beginning that you would work with them to pay your debts off. This will keep you from avoiding any legal trouble, which you certainly don’t need on your record at this point. I think the only fees these places charge are basically administrative fees for being the middle man between you and your creditors. I don’t think they can force you to keep making payments if you instruct them otherwise. They will probably just contact all of your creditors, get payoff balances for you, and then coordinate getting the necessary funds from you to make one last payment to each of those companies. They may charge their regular fee for this or one last fee, but this should be it.
And in terms of paying these companies off early, you absolutely will not hurt your credit, in fact it’s the exact opposite. What they don’t tell you with these counseling services is that banks and credit companies really don’t like them, and it doesn’t show up on your credit report as if you had been making regular payments all this time, what shows up is that you cancelled all of your cards and had to go through a credit counseling service. That’s why after you pay everything off, it will be so important to keep your credit as good as possible, and also to get ahold of a copy of your credit report to see how much damage has been done so you can try to repair your credit score. Banks and credit companies don’t like these types of services because it demonstrates that you are unable to keep a tight control on your finances. You would think it would be the exact opposite, but when my husband and I were buying our first house, I was finishing up with my credit counseling and the bank required a letter from the counseling service stating where I was in the program and as a sort of recommendation letter. It actually could have hindered us buying a house because the bank wondered if I would be a financial risk. Although, after you pay off your debts, strangely enough you will start receiving tons of credit card offers because they figure that given your past you will spend tons of money if given a credit card. Go figure! Good luck to you and hope this helps!
