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Help with getting out of debt; red flags to avoid

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Posted at 1:53 PM, Nov 10, 2021
and last updated 2021-11-11 11:57:42-05

LAS VEGAS (KTNV) — The pandemic has proven to be a real financial hardship for so many Americans. But you shouldn't have to live in fear of debt collection calls. 13 Action News anchor Tricia Kean speaks with a financial expert about getting help and avoiding companies that prey on the desperate.

CREDIT CARD DEBT

"Oh, without a doubt. I had no idea it was that much," says Jackie Upshaw.

She was shocked to see her credit card debt.

"I mean because I was paying my bills. None of them had ever been late," Upshaw said.

$22,000 HOLE

But only paying the minimum wasn't helping. Upshaw managed to put herself in a $22,000 hole, using 18 different cards.

"It was so easy. I had pretty good credit. So I was getting credit cards left and right. It just got out of hand," Upshaw said.

That's when Jackie decided to get professional help.

MONTHLY BUDGET

"So somebody's watching right now. They're in a lot of debt and they feel like they're drowning in debt. What's the first thing they should do?" asks Tricia. "The first step is really to understand what's happening. Because many of the clients that we work with have never done a monthly budget," says Thomas Nitzsche with Money Management International or MMI.

He says Upshaw's case isn't unusual. Many people never take the time to come up with a spending plan.

"Just understanding what's coming in. What's going out. It's actually very basic, but it's surprising how many people don't do it," Nitzsche said.

CONSOLIDATE

Upshaw admits she was one of them. MMI helped her develop a budget and then consolidate her debt.

"They go and talk to creditors to see if they can get the interest rates down to zero or something under 10% and it works," Upshaw said.

THREE RED FLAGS

Just be careful about who you hire if you're looking for help. Take time to do your research and beware of three major red flags. The first is any company claiming they'll settle your debt for pennies on the dollar.

"The second is if they tell you to stop paying your creditors and don't talk to them anymore," Nitzsche said.

The third red flag is any company asking for an upfront fee, to improve your credit or make your debt go away. Places like MMI offer nonprofit financial education and counseling.

CLIENT/CREDITOR FEES

"Now, how do you make your money?" asks Tricia. "A couple of ways. For clients who enter into a debt management plan, there is a nominal client fee of about $24 a month," Nitzsche said.

Creditors also pay a fee. It's called a fair share payment and it goes to agencies like MMI, providing debt-consolidating programs.

"It's 100% confidential. There's no judgment. What we usually hear from our clients is, I wish I would have talked to you sooner. I don't know why I was so afraid," Nitzsche sad.

FACE REALITY

Upshaw says if you're struggling to pay off debt or only making minimum payments, it's time to face reality.

"There's no shame in owning up to the fact, alright I went a little far overboard. Now I've got this debt and I need to figure out how to pay it off," Upshaw said.

Upshaw is happy to report she's paid off all her credit card debt. She's also improved her credit score by more than 100 points.