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Not many are calling credit hotlines

Toll-free numbers for nonprofit credit counselors began appearing on credit card statements more than a year ago. Yet counselors say the phones aren't ringing.

It could be that cardholders simply don't bother checking their statements. Or they may fear that reaching out for help would be futile, or even damage their credit scores.

Whatever the reasons, the National Foundation for Credit Counseling says its member agencies received a mere 150,000 calls from credit card statements. That's despite the phone numbers having been printed on 500 million statements since February of last year.

The inclusion of the phone numbers was part of the sweeping credit card regulations known as the CARD Act. In addition to banning numerous billing practices, the law required the revamping of statements to make clear the interest costs of carrying a balance. The idea was to help borrowers get debt under control.

If you're curious about what help credit counselors can provide, here's what you should know:

Credit counseling agencies offer assistance on a broad range of financial matters. You can turn to them for basic help, such as drawing up a monthly budget. Or you may need more urgent guidance on how to prevent bankruptcy or foreclosure.

Counseling can take place over the phone or in person, although the majority of borrowers opt for phone counseling. A session might take about an hour and, depending on the help being sought, you'll likely be asked to bring financial information such as pay stubs and various bills.

One of the flagship services is a debt management plan, or DMP. This entails the agency acting as a go-between with credit card companies to work out terms for you to pay off credit card balances.

The balances won't be reduced. But card companies may waive penalty fees or lower interest rates as part of the agreement. Just how much of a break you'll get will vary.

Basic counseling sessions are free or may cost up to $20. A debt management plan, however, can come with more considerable costs.

When you enter a debt management plan, it's noted on your credit report that the affected accounts were closed and are being repaid through a nonprofit. Creditors will know this means you're on a debt management plan.

This means you won't be able to open a new line of unsecured credit. So you will have to rely on your savings and checking accounts for the duration of the plan.

As for your credit score, entering a debt management plan will generally improve your standing. That's because you're whittling down the amount of debt you owe and making on-time payments, said John Ulzheimer, president of consumer education at SmartCredit.com.

Once you complete a plan, Ulzheimer said there's also no evidence that you were on one.

Keep in mind that credit counseling agencies differ from debt settlement companies. The latter are for-profit companies that promise to negotiate with creditors to dramatically reduce your debt. A debt settlement can also seriously damage your score for many years.

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