In these difficult economic times, it’s common for people to live from paycheck to paycheck. They worry about dealing with debt collectors constantly. A workable budget seems unreal to them, and money for retirement is out of the question. When people find themselves in such a situation, there is help available. It may be time for them to consider the services of a nonprofit credit counseling agency. But which agency should they choose to work with?
There are, of course, a lot of different credit counseling service companies out there and selecting the right one can be challenging. To sort through and limit the number that you are planning on considering it is essential to summarize the key factors that make up your debt, income, expenses and organize it into a chart. Doing so will allow you, and any professional credit counseling company to understand your current financial position and the depth of the challenge you are facing. The goal of this is to find a credit counseling service that is the right size for your needs by offering you personalized care and attention, but at a cost that is beneficial to your needs.
Having a significant amount of debt can be both financially and personally challenging. Significant debt levels can lead to depression, stress, and can even harm marriages and other personal relationships as well as your motivation to work. When you have a significant amount of debt, it is essential to put a plan in place to manage your debt and develop a game plan to get rid of your debt.
For those who are financially experienced and savvy, financial experts will commonly recommend developing a personal budget and a game plan for repaying your debt, as well as keeping charts and amortization tables for your current debt obligations and key debt terms such as interest rate and repayment terms. For those who need additional help, a credit counseling service is greatly recommended. Credit counseling services provide you with professional experience and expertise in managing your debt and help you to get your debt in order. They can help you to formalize a plan to repay your debt in a way that doesn’t overwhelm or put too much stress on your current lifestyle but to gradually lower your debt and put you on a better financial footing in the future.
Credit counseling services seem to expand in number exponentially every single year. With perhaps dozens to choose from in your area, you might not know how to find the best service. If you don’t choose a reputable agency, however, you may suffer some setbacks. Fraudulent credit counseling services engage in dirty tricks like requesting hefty upfront fees for counseling services or sharing your personal information with other businesses. If you’re already struggling with debt problems or have a dismal credit history, you can’t afford to choose a fraudulent agency. We’ll give you some tips on how to find the right nonprofit credit counseling agency.
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Locate a reputable agency first –
You should not settle on the first non-profit agency you see without doing some homework on them and their reputation. You should be willing to contact more than one agency and ask each of them to send free information explaining their services and any associated fees. If an agency is not willing to do this, it should be considered a red flag. Once the list has been narrowed down to one or two, the next step is to research each one with the state’s Attorney General’s office and the Better Business Bureau. Also, you should check with local consumer protection agencies and also with the National Foundation for Credit Counseling (NFCC) on their current status and membership.
Find a credit counseling agency with a solid reputation and experience that goes back several years. If the agency you are choosing is a sole proprietor, then ask to see his personal references and experience and reach out to his references and ask for ways that the individuals were helped. Be sure to interview with the credit counseling agency and see how much time they are willing to dedicate to your case and problems. You will want to avoid using a credit counseling company that tries to rush through your meeting as it is likely that they won’t be willing to dedicate a significant amount of time to you in the future. If you are looking for a larger credit counseling agency, ask to interview several different credit counselors there and choose the one you feel most comfortable working with.
What are some signs that a credit counseling agency is legitimate?
- Longevity –
If a credit counseling agency has not been in business for at least 5-10 years, pass it up. In any business, start-ups will need to struggle, and their managers will need to flail before hitting a smooth business stride. By the five-year mark, a credit counseling agency should have a definite business plan and will have developed a reputation in the industry. This is about the time in a company’s history when you can begin to discern whether that reputation is good or bad. Obviously, the longer the agency has been around, the better. That means they are an established and trusted agency to be doing business for such a long time.
- Accreditation –
If a credit counseling agency lacks accreditation, it is not an agency worth your time. A trustworthy agency can prove that it has been accredited by the Council on Accreditation (COA) or the International Standards Organization (ISO). The accreditation must be current, too; these agencies enforce strict standards on an ongoing basis to ensure that consumers are not defrauded by their credit counselors. They should also be members of the National Foundation for Credit Counseling (NFCC) and also hold a high rating (A or A+) with their local Better Business Bureau (BBB).
- Good References –
The degree of notoriety a credit counseling agency has acquired for being disreputable is wholly dependent upon how long the company has been fraudulent, and just how fraudulent it has been. Companies can get away with scams for years – just look at Enron.
Place a call to your Better Business Bureau and your state’s Attorney General’s office to learn more about a credit counseling service that you’re considering. You will find out whether or not that credit counseling service has engaged in shady dealings. Check out online reviews from past clients as well. Look for reviews from multiple online resources and not just ones posted by the agency themselves. You can even ask the agency if they can give you any professional references that you might be able to contact and ask them how their experience with the said agency was.
They offer phone, online, and in-person counseling –
A reputable non-profit credit counseling agency will offer services at their office locations, over the telephone, and also online (the most preferred method by many consumers). Many of these agencies provide in-person counseling if you seek a more hands-on approach. A list of local non-profit credit counseling agencies can be found at universities, housing authorities, military bases, credit unions and more. You can always check out the NFCC to find an agency near you. However, with technology growing by leaps and bounds every single day, online counseling is a very popular method and can be completed from the privacy and comfort of your own home on your desktop computer, tablet, or laptop.
Questions are always welcome –
A credit counseling agency will want to be asked questions and will expect it. People should want to know what services a non-profit credit counseling agency can offer. Do they offer savings and debt management classes? Do they offer budget counseling services? Do they offer bankruptcy help if you are thinking about that? If an agency is contacted, and they don’t ask about a person’s financial situation BEFORE talking about debt management, this should be considered another red flag. Here’s a list by the Federal Trade Commission (FTC) of some great questions to ask: https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor
Find out about any fees –
Every counseling agency should be very upfront about their fees. It’s important to ask if there is a set-up fee or monthly fees associated with a service. An individual should not go with an agency that does not provide an itemized list (in writing) of the fees. It’s also important to ask if a person is not able to afford the monthly fees for whatever reason, what will happen then.
Most non-profit agencies offer a fee waiver if certain income guidelines are met. If a person truly cannot afford to pay any fees, they should never be turned down. A true non-profit agency will still help them even if they can’t afford to pay the fees. If a non-profit agency doesn’t help someone because of their inability to pay, they may want to consider looking for another agency.
Consider the cost of the services provided by the credit counseling service. Some work on hourly rates, while others have contracted rates or go pro bono based on the client’s income level. Discuss the terms offered by the credit counseling service and see what type of arrangement you feel comfortable with as you work to reduce your debt load and get set on the path of financial security.
Discuss all of your creditors –
The agency will be able to contact all of the creditors on behalf of their clients and discuss a reduced payment plan with them. It’s also important to ask if the non-profit credit counseling agency is able to get creditors to provide lower interest rates or eliminate fees. Ask if they are able to waive finance charges as well as any late fees. An agency will tell a person if they’ll have to make any payments BEFORE their proposal is accepted by the creditors. A proposal is just a written agreement between the debtor and the creditor as to what the creditor will accept as payment each month and other terms like the payment date.
If you have any special types of debt or specific lenders you are dealing with, which may be the case with owners of their own businesses, see whether the credit counseling service has specific experience with this lender and what type of relationship they have with them. Many large lenders will sell their old debt to companies that buy the rights to your debt for fractions on the dollar. These debt buying agencies are willing to accept less than the face value of the debt as it represents a gain on their end from the pennies on the dollar which they bought the old debt for. Having a credit counseling service that is experienced in dealing with the debt buying agency that holds your debt can provide you with a real advantage when trying to negotiate partial forgiveness of this debt balance.
Advantages to free credit counseling –
When a person signs on for the services of a non-profit credit counseling agency, they will be able to consolidate all of their unsecured credit card debt into a single monthly payment that gets paid to the counseling agency. They will no longer have to make multiple payments to multiple creditors. It will be just one payment a month. The credit counseling agency will disburse that money out to all of their creditors on the debt management plan. The total monthly payment will usually be reduced. Many clients pay less each month than they would on their own.
Success stories of that agency –
Many consumers have been helped by debt relief programs offered by non-profit credit counseling agencies. On average, individuals have saved over $180 a month on credit card payments, sometimes more and sometimes less. This can happen when credit card fees are waived, interest rates are lowered, and debt is properly handled with the creditors. Millions of people who did not see a way out of debt are provided with a clear and understandable resolution. You will be given an estimated date of when all your debts are to be paid off.
Why is debt management needed –
Sadly, the need for debt management plans has skyrocketed in recent years, as more and more Americans get into debt that’s over their heads. Most of the time, this is due to the irresponsible use of credit cards, but sometimes it happens due to unforeseeable circumstances, such as the loss of a job, an accident or illness, or a family emergency. Whatever the causes, the need for a debt management plan is at an all-time high, so you are not alone.
Debt management plans can help –
Debt management plans are a vital service provided by both for-profit and non-profit organizations to help consumers better manage the repayment of their unsecured debts. The term ‘debt management credit counseling’ actually describes two distinct services – debt management and credit counseling. The credit counseling part takes place first. It entails a discussion between the client (debtor) and a trained and certified credit counselor that is designed to get a clear financial picture and map out ways to make the best use of the client’s income for paying off unsecured debts. In some cases, this discussion reveals that the client cannot feasibly continue making monthly payments on time by themselves, which indicates the potential need to move into the debt management part of the discussion.
Whatever the reason may be for seeking out credit counseling or going on a debt management plan, just know that you are not alone and there is help out there. Make sure to do your due diligence when it comes to selecting a credit counseling agency. Also, make sure you completely understand the terms of a debt management plan if you sign up for one. Both are very beneficial but only if you know what’s expected of you and that you can meet the agreement terms every month without a problem.
If you have any questions, give our nonprofit credit counseling agency a call at 1-866-699-2227 or visit us online at www.advantageccs.org for more information or to Live Chat with one of our representatives. We’ve been helping people get out of debt for over 50 years now and we can help you too! Reach out to us today, the call is free and there are no obligations.