Other articles by Todd Ossenfort:

The Credit Guy: Transferring debts to someone else requires his cooperation, good creditThe Credit Guy: Putting sister on credit card leaves its primary holder holding the bagThe Credit Guy: Changes to credit-card laws call for consumer vigilanceThe Credit Guy: Discipline is first step in a card-repayment planThe Credit Guy: Make offer, then it's up to collection agencyThe Credit Guy: Settling on card debt could settle your hashThe Credit Guy: First thing — let creditors know you're joblessThe Credit Guy: Rest easy about Social Security, card debtsThe Credit Guy: Company credit-card bill adds insult to injuryThe Credit Guy: Have a counselor handle embarrassing inquiry

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Q I'm enrolled with a credit-counseling organization for help with three credit cards that I misused. So far I've done pretty well — always making my payments — but I have to say I haven't see a huge change in the bills I'm receiving from the credit card companies. I've been paying for almost two years on a three-year plan. My real question is that we recently looked at new cars. Knowing our credit wasn't perfect, we had them check our finance options. They seemed to look at us like morons for being part of a credit-counseling program, which I didn't know how to defend. Is this stuff legit or would I be better off just trying to pay these bills myself? I honestly don't think so, but this guy told me I would. What does he know that I don't?

A I see these situations quite frequently. First of all, I would ask you to consider the source: a car dealership "finance guy" that gets paid a healthy commission for selling you a loan. Many times these "finance guys" have little or no formal training in budgeting or reading credit reports. Their job is to sell you the loan regardless of what is best for you.

The fact that you have been able to make all your payments for the past two years to the credit-counseling organization and you haven't experienced any other financial hardships illustrates to me that the plan is working. Would you agree? So, I'd feel safe in saying, no, you would not be better off trying to pay the bills yourself. On most debt-management plans, the creditor offers a lower interest rate and a lower payment factor until the outstanding balances are paid off. You would lose these benefits if you decide to pay these bills yourself. I would recommend you stay on your debt-management plan and finish paying off your credit card debt.

Also, part of the agreement you signed when you enrolled on the debt-management plan stated you agree not to acquire any new credit while participating in the plan. It really isn't fair to the three banks that took a risk on you in the first place by extending you credit in the hopes that you pay them back as agreed and then be put off longer so you are able to drive a new car. After you admittedly misused that privilege and found yourself in trouble, the banks agreed to give you a lower payment and lower interest as part of a debt-management plan. In return for these concessions, they ask that you don't acquire any new credit.

Your situation is a classic example of having a financial road map but not sticking to it. How long has it been since you spoke to your credit counselor to update your monthly budget? Has your monthly income significantly increased or have your fixed expenses decreased since you enrolled in the debt-management plan? Can you really afford a new car or is it just to keep up with the Joneses? You say that you are on a three-year debt-management plan. There is light at the end of the tunnel. You are almost there. Finish it up.

After completing the debt-management plan, then it is time to shop for a new or used car depending on what you can afford.

Although some lenders do react negatively to accounts' being flagged as part of a debt-management plan through a credit counseling agency, many view them positively. I would be willing to bet that from the time you enrolled on your debt-management plan until the time you finish the plan, your credit score will increase.

Not that you should ever feel like you need to defend yourself to a potential lender, especially a "finance guy" at a car dealership, but the answer to why you are involved with a credit-counseling program is quite simple: You wanted to make good on your promise to fulfill your end of the credit agreements and you are doing that with the help of a debt-management plan. Lenders want to extend credit to people who are making good on their promises to pay rather than walking away from their debts.

The Credit Guy