North Carolina consumers are as in over their head in credit card debt as everyone else. Needless to say, many of its residents have found themselves online searching for debt consolidation solutions and consumer credit counseling help. All too often, however, people in debt are not only confused by what program is right for them, but they are confused about what debt management professionals they can trust. PayingPaul.Com’s mission is to assist consumers along with the process by providing objective information about the best debt help decision.

In order for one to make a good choice, one must understand the types of credit card consolidation programs that are being offered. The two most popular are credit counseling and credit card debt settlement. Credit counselors are usually non-profit and can help you learn how to budget and better manage your financial affairs. For many this is enough to get their debt under control. If not, you may want to consider enrolling a credit counselor sponsored debt management plan (DMP). Debt management plans entails working with creditors to lower your interest charges, waive late fees, and restructure your debt so that paying it off is affordable.

Debt settlement, also known as debt negotiation, on the other hand, aims at reducing your credit card balances, not just interest charges and fees. Due to this fact, it is generally the fastest way to get out of debt outside of bankruptcy. Although the savings from these programs can be dramatic, there are several downsides to consider, particularly the fact that your credit score after debt settlement may suffer. The reason why is that in order to qualify for a settlement, one must be behind on their payments. This can also lead to other problems, such as collection calls and possibly even litigation.

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North Carolina Debt Management Laws

North Carolina has regulations in place to ensure that its residents are receiving affordable debt management services. The laws ban debt consolidation, or “debt adjusting” as it is referred to in the statute entirely.

Definition

Under North Carolina law, an organization qualifies as a “debt adjuster” if they enter or a make “a contract, express or implied, with a particular debtor whereby the debtor agrees to pay a certain amount of money periodically to the person engaged in the debt adjusting business and that person, for consideration, agrees to distribute, or distributes the same among certain specified creditors in accordance with a plan agreed upon.” The definition continues to include:

-“the business or practice of debt settlement or foreclosure assistance whereby any person holds himself or herself out as acting for consideration as an intermediary between a debtor and the debtor's creditors for the purpose of reducing, settling, or altering the terms of the payment of any debt of the debtor, whether or not the person distributes the debtor's funds or property among the creditors, and receives a fee or other consideration for reducing, settling, or altering the terms of the payment of the debt in advance of the debt settlement having been completed or in advance of all the services agreed to having been rendered in full”

Exemptions

It should be noted that the law does allow, among others, attorneys-at-law licensed in the state who is not employed by a debt adjuster to engage in debt counseling, as well as a debt management company so long, among other things, it charges a nominal fee.

Fees

According to North Carolina law, a “nominal fee” for debt consolidation is the following:

-$40 for a set up or origination fee
-10% of the plan’s monthly payment as a service fee, but not to exceed $40

For more information about debt reduction solutions in the state, feel free to browse this link: North Carolina Debt Adjusting

Other Resources

Filing Bankruptcy in North Carolina

Bankruptcy Laws in North Carolina

Debt Collection in North Carolina