Choosing the Right Credit Counseling Service

When you decide you need the help of a credit counseling agency, choose an agency that does not charge excessively for their services and will give you all the information you need in a straightforward, up-front manner.

How to Choose the Right Credit Counseling Service

• Choose a non-profit agency over a for-profit agency.
  Non-profit agencies offer free financial counseling, a small initial fee that usually won’t exceed $50, and discretionary monthly payments to help the agency counterbalance its cost of managing your accounts and debt. Creditors that work with nonprofits usually give them a "fair-share contribution," which is a certain percentage of debt the agency helps the creditors recover.
• Find out precisely the services you'll receive.
  As a bare minimum, a credit counseling service should provide you with debt counseling, a debt-repayment plan and budgeting advice. Most provide you with extensive credit education, and the more services available to you, the better you’ll be able to get a handle on your debt and prepare for your financial future. Try to get everything in writing before you proceed.
• Don’t be pressured into accepting an agency’s services. Avoid the hard sell. You need a thorough debt assessment, not a quick, over-the-phone, 10-minute summary from someone you’ve never met or who doesn’t really know your personal situation.

What to ask before you sign up

Services and Fees:

• What services does the agency offer?
• With which debts can I get help? Ask about both unsecured and secured debt, including car loans and mortgages.
• Will the agency provide me with educational materials? Are the materials free? Can I access them on the Internet? Will the agency send them to me?
• In addition to getting help to solve my immediate problem, will the agency help me develop a plan for avoiding future financial problems?
• What are the fees I will be expected to pay? Do I have to pay before I can receive assistance? Are there monthly fees? What is the basis for the fees?
• What is the source of the agency’s funding?
• Will a formal written agreement or contract outlining the services I will receive be put in place? Will I receive a copy?
• How long will it be before I can get help?
• Who regulates, oversees and/or licenses the agency? Is the agency audited regularly?
• Will I be assigned to one counselor or will several different counselors be helping me?
• What qualifications do the counselors hold? Are they accredited or certified? If not, how are they trained?
• What guarantee do I have that information about me (including my address, phone number, or e-mail address) will remain confidential?

Repayment Plan

• Do I have to owe a certain amount to receive services or assistance from the agency?
• How is the amount of my payment determined? What happens if I can not afford the payment?
• How does a debt repayment plan work? How will I know my creditors are receiving payments? Is the money I or other clients pay put in a separate account from operating funds?
• Can I get status reports on my accounts? If so, how often? Can I access my accounts online or by phone?
• Can the agency negotiate with my creditors to lower or eliminate interest and finance charges or waive late fees?
• Is a debt repayment plan my only option?
• What if I can't maintain the agreed-upon plan?
• What debts will be excluded from the debt repayment plan?
• Will the agency help me plan for payment of these debts?
• Who will help me if I have problems with my accounts or creditors?
• How secure is the information I provide to the agency or credit counselor(s)?