Credit Counseling - Can It Get You Into More Trouble?
Does your heart skip when the phone rings? Are you afraid to
open the mail and get another letter from a debt collector? If
so, you are not alone. Many Americans are in debt up to their
eyebrows and most don't even know what options are available to
help them. They just struggle paycheck to paycheck, make minimum
payments and watch with frustration as the interest rates eat
all the payment and the debt seems to just grow.
Credit counseling is one option to help deal with debt problems,
but before jumping the gun and signing up with any credit
counseling firm, do your homework.
Many credit counseling organizations are both legitimate and
nonprofit. They work with you to solve your debt problems.
However, there are also those who may say "nonprofit" and charge
fees. And those that are completely illegitimate. Some credit
counseling organizations charge high fees, others hide their
fees and the third group may ask for "voluntary" contributions.
All of these will eat into the payments you need to make to your
debt.
Choosing a Credit Counseling Organization
Find out if they are willing to send you free information about
themselves. You are looking for firms who are willing and open
about themselves and their policies. If they hassle you for an
appointment or want too many details from you before they send
you anything, go elsewhere.
What you want to get from a Credit Counseling Organization, to
start with, covers the following:
Are they licensed to offer you services in your state?
What are their set-up fees?
What are their monthly fees?
Are there any other fees or contributions required?
What are the qualifications of their counselors?
Are their counselors accredited and/or certified by an outside
organization? If so, by whom? If not, how are they trained?
Third party certification adds an independent unofficial
auditing that is helpful.
How do their counselors get compensated? You want to avoid
anything that resembles commission.
What assurance do you get that your private information remains
confidential and secure?
What services do they offer? Debt management is just a part of
the debt issue and you may need other services to help you
accomplish what you need. Look for a wide range of services
without bias. If an organization says they have a wide range and
then push a particular service such as debt management plan
(DMP), then they are biased.
How can they help you with both the immediate debt problem as
well as long term plan to help you stay on track?
Will you have a formal written agreement or contract with them?
You need everything in writing and you need time to review them
before you sign. Consider verbal promises invalid.
Once you get the information in the mail, you need to confirm
that the credit counseling organization is both legitimate and
reputable. You can check their legitimacy by contacting your
state Attorney General, local consumer protection agency, and
Better Business Bureau. See if there are licensed and if there
are any complaints against them filed by consumers. Remember
that a clean record is just a start and does not guarantee
service.
Checking their reputation is harder since they deal with
confidential information and you cannot ask them for referrals.
I understand that asking friends and family could be a little
awkward but getting recommendation from someone who actually has
dealt with an organization is one of the best ways to screen a
firm.
Many reputable credit counseling organizations offer free
educational materials and workshops. They are in the business of
helping you get to the root of your budgeting issues. Take
advantage of their workshops that will also give you an
opportunity to check them out in person.
Your financial institution and your local consumer protection
agency could also be good sources of information.
I like what William F. Halsey said about problems. "All problems
become smaller if you don't dodge them, but confront them."
May your problems become smaller.
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mortgage product or lender. This article and website does not
provide legal, accounting, or other professional services. If
legal or other expert assistance is required, the services of a
competent professional should be sought. Although Vishy Dadsetan
has made every effort to ensure the accuracy and completeness of
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responsibility for errors, omissions, inaccuracies, or
inconsistencies.