Things You Must Know About Credit Counseling Agencies

A credit counselor might be a good idea to contact if:

1. You have multiple forms of debt such as credit cards, mortgages, auto loans and other unsecured loans and are having difficulty making the monthly payments.
2. Your problems have already been discussed your credit card issuer and you do not have an effective solution in place for paying off the debt.
3. You are unable at this time to pay even the minimum amounts due on your credit cards or other bills.
4. On one or more of your regular bills you are constantly late for fighting to keep up.

1) Should I use a “for-profit” or “non-profit” agency?  It is wise to seek out an accredited non-profit credit counseling agency rather than a for profit debt relief company.  A reputable agency uses the best business practices and policies to help make sure your money is secure.  This will give you confidence that everything is being handled correctly and in order.  In short, the focus needs to be on you and helping you solve your debt issues, not on whether they will make money from you.

2) Must they be accredited?
To ensure that the assistance you are receiving is designed to accomplish your goal of getting out of debt, the agency with which you work needs to adhere to the following practices and policies.

1. Be an IRS recognized non-profit organization.
2. Must have obtained the proper licenses both state and local if applicable.
3. Perform regular audits of their operating and trust accounts by an independent organization.
4. Submit plans for reducing and eliminating consumer’s debts through their program.
5. Have a regular plan in place in making the proper payments to creditors at least once a month.
6. Send out statements at regular intervals to clients.
7. Assist consumers in overcoming debt by offering various educational programs.

3) What questions should be asked of the agency?

1. Is this a non-profit organization?
2. Are there any fees for the services being rendered and will you be informed of them?
3. What about confidentiality of information of its clients or customers?
4. Are the plans that are set up customized to fit each client’s needs?
5. Do they have certified counselors in their organization?
6. Are there any other opportunities offered in the area of credit education and budgeting?
7. Is protection provided for the clients money?
8. Is this an accredited agency?

4) How can you tell if they are reliable?

Reliable credit counseling agencies never make the following statements:

1. “We will permanently remove your debt.”
2. “We will pay your bills if you pay us.”
3. “Of the bills we get rid of we require a percentage from you.”
4. “Credit card companies cannot sue you over unpaid balances and accounts.”
5. “We can manage your credit history and get the bad credit removed from it.”
6. “You will not have to file for bankruptcy if you use our system.”
7. “You must refuse to speak to your creditors any longer.”

Being in a position of not being able to make payments to your creditors is a very emotional thing.  It is wise to seek the counsel of a third party organization can help you work through her debts and obligations.  The reason is they do not view things through the emotional prism that you do.  Plus they apply proven principles to your situation which will help you manage your debt and pay it off.

Here is a list of some outstanding resources on credit counseling agencies as well:

National Foundation for Credit Counseling (NFCC) – The NFCC is the national arm and centralized voice for NFCC members known as Consumer Credit Counseling Service ® (“CCCS”).  NFCC members are all non-profit, community based agencies.

United States Department of Justice (USDOJ) – The USDOJ website has a list of approved credit counseling agencies by state on its website, many of which provide counseling services in languages other than English.

FinancialPlan.About.com – About.com has an informative page on consumer credit counseling services and provides tips and advice on whether or not you should use any of them.

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This entry was posted on Thursday, March 5th, 2009 at 10:23 am and is filed under Debt & Consolidation, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.