When you need debt help, consumer credit counseling can be useful. But finding a reputable consumer credit counseling service with debt solutions to meet your needs is not as easy as it would seem.
For example, virtually all consumer credit counseling services are non-profit. That does not make them legitimate, nor does it mean they don't take advantage of consumers.
Check with your local Better Business Bureau and your state Attorney General's office to see if the consumer credit counseling service you're considering has had any complaints. Don't look at its non-profit status and assume it is working in your best interest.
Here are some key questions to ask when shopping for a reputable consumer credit counseling service.
1) What services does this consumer credit counseling agency offer?
If Debt Management Plans are the only services the agency offers, look elsewhere. A reputable consumer credit counseling agency will also offer educational classes and counseling.
A reputable agency will sit down with you in person and discuss your financial situation with you. This will take approximately an hour-and-a-half, and you should leave with a personalized plan that may or may not include a Debt Management Plan.
If the credit counseling service you're dealing with tries to offer you a Debt Management Plan within the first 15 minutes, they clearly haven't taken the time to understand your financial situation.
2) What precisely are the fees you will be charged?
You should be able to get information about the credit counseling agency's services and fees in writing before disclosing any of your personal information. If you can't get a clear understanding of the fees up front, that's a red flag. Agencies that are part of the National Foundation for Credit Counseling disclose their fees right on their web sites.
3) Where will your payments be going?
If you do sign up for a credit card debt management plan, make sure all of your payments will be distributed to your creditors. Some credit counseling agencies will claim the first month's payment is a fee or a "voluntary contribution." This is not a sign of a reputable credit counseling service.
Moreover, a true non-profit agency should offer to waive its fee if your situation warrants it.
In addition, reputable credit counseling services should work with all of your creditors, not just the ones with whom they have contracts.
4) How long will it take to pay off your debts?
A realistic Debt Management Plan will take 30 to 60 months to complete, on average. Be skeptical of consumer credit counseling services that offer quick-fix solutions and big claims at wiping out your debt fast.
5) How are the counselors trained and paid?
Although there is no national certification program or agency for consumer credit counselors, reputable consumer credit counseling agencies provide adequate training for their counselors. Members of the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies require their counselors to pass a certification test administered by a third party.
Moreover, reputable credit counseling services pay their employees a salary. If the consumer credit counseling service you're considering pays its employees a bonus or a percentage when you sign up for a Debt Management Plan, look elsewhere.
For more information about finding a reputable credit counseling service and whether a debt management plan is right for you, read this article on credit card debt relief.
Stephanie Gallagher - Stephanie Gallagher is a veteran journalist and author. In addition to writing for Suite 101, she is the Cooking for Kids columnist for ...
