Navigating Credit Counseling Choices

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Navigating Credit Counseling Choices
2 years ago
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If you have already tried negotiating your dept with your individual creditors and banks and are still struggling with unsecured debts such as credit cards, it might be time to find a credit counseling agency. The credit counseling agency will help you create a budget, advise you, provide you with educational materials, and possibly help you set up a dept repayment plan. However, with so many unscrupulous credit counseling agencies out there, finding a good one might seem like a daunting task. Here is a brief guide that will make the processes of finding a credit counseling agency easier.

To find a credit counseling agency, begin by visiting the National Foundation for Consumer credit online or by calling them. They list over 1,400 locally managed non-profit agencies and can be reached 24/7. Or, check your local government listings for your local cooperative extension service that can direct you to credit educational materials and possibly help you find some Credit Counseling Agencies. The United States Trustee Program has a list of agencies that are specifically approved for pre-bankruptcy. You might also use a phonebook or online resources to come up with some possibilities.

The next step to finding a credit counseling agency is to assemble a list of possibilities. Contact these agencies with initial questions and ask them for information, which they should always provide for free. Are the counselors trained in/certified in consumer credit, money/debt management, and budgeting? What are the fees and is employee compensation based on the services for which you sign up? You should not be expected to pay several hundred dollars and the agency should negotiate fees if you cannot pay them. You should not have to provide your financial details when finding a credit counseling agency. If you are asked to do so, cross that agency off of your list.

Remember that finding a Credit Counseling Agency is not finding a debt negotiation company. They might work with debt repayment companies but this should come later and without pressure. The credit counseling agency that you find should provide other services, and the fees they charge you should not be related to the dept negotiation for which you sign up. Furthermore, if you do sign up for a dept repayment plan through a Credit Counseling Agency, you should not be paying more than a $50 set-up fee.

After you find a preliminary list of credit counseling agencies, check with the Attorney General, your local consumer protection agency, and the Better Business Bureau to check if there are any complaints about those agencies. If you find any complaints, cross those agencies off your list.

Just because a credit counseling agency doesn't have a complaint filed against it, does not mean that it is a good one. Therefore, you will need to "interview" your final list of agencies and ask them more detailed questions. Where does their funding come from? How will your information be kept confidential? What are the counselors' qualifications and licenses? Are they trained by an unaffiliated third party? Who will you specifically be working with? Will the credit counseling agency deal with all of your unsecured creditors?

Your last step in finding a credit counseling agency is to get certain information in writing. Have them quote you any fees, total cost, time expected to get a result, and any guarantees. You will also need their address, names, and contact information in writing.
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