Credit counseling companies come in all shapes and sizes. Whether you are looking at working with a local credit counseling organization or a national firm, there are some very important factors to look at before choosing the right service for you.
Here is a list of questions for you to ask a credit counseling company before determining whether or not you want to move forward with them, or seek another agency.
Free Educational Services
One of the most important aspects of a credit counseling organization is what types of financial education services do they provide? Ask the credit counseling company if they have an education program in place and if they offer this service free to any individual that is interested in getting help with improving their financial picture.
It is very important that the credit counseling organization that you choose to work with offers this service at no cost. It is also very important to make sure that the credit counseling organization doesn’t require your participation in their credit counseling services or otherwise known as a “Debt Management Plan” in order to receive their educational services at no cost.
Credit counseling fees vary from one agency to another. Make sure to ask the credit counseling organization for a breakdown of their fees. Some organizations require large upfront deposits or payments to enroll you in their plan. Typically debt management or repayment services that charge high fees aren’t actually considered credit counseling services but rather fall into credit repair or debt settlement services. Credit counseling organizations are regulated by many states as far as what they can charge as an enrollment fee.
Also, check and make sure that their consultations are provided at no-cost to you. It’s my experience that a good credit counseling service will typically have a solution recommended for you regardless if you end up using their services or not.
Credit counseling is all about you and your financial situation. When it’s your dollars at stake, make sure to ask the credit counseling organization about what type of customer service they provide. Credit counseling organizations should have someone available for you to talk to during all business hours of the day.
Be leery of a credit counseling organization that consistently requires you to leave a message in order to speak to customer service. This can be a sign that the organization is shorthanded and having difficulty meeting their client’s needs. You may also want to determine if you have access to view your account online or access it via your mobile phone. Full access to your information can be critical to the success of your repayment plan.
If you have any questions, would like to discuss your financial challenges, or are just looking for advice, please call us at your convenience. As always, we are here to help and look forward to hearing from you.
Credit counseling organizations are held to certain standards by state regulatory officials. Agencies are required to adhere to state licensing requirements. It is important that you ask the credit counseling organization if they are compliant and able to offer credit counseling services in your area.
Keep in mind though, that although a majority of states have requirements for credit counseling organizations not all do. You may want to check your particular state’s finance and banking department if you have questions regarding the status of the credit counseling organization you are speaking with.
Credit Counselor, or Not?
Credit counseling has been around for years. However, recently credit repair or debt settlement companies have sprouted up everywhere. Credit counseling has a proven record of working for consumers. Recently credit counseling organizations have come under fire from the press and IRS due to a few bad seeds. These companies were not credit counseling to its truest form.
Along with the credit counseling industry in turmoil over the bad seeds, more and more credit repair companies making false claims came along. Credit counseling took a hit for that although the two practices are entirely different. Then you have debt settlement. Debt settlement companies claim they will have your debt paid off in a short time. It would be nice if they were paying it all back, but typically they aren’t. You may also become extremely past due and your credit can be damaged for a considerable amount of time.
Sometimes these companies, or their representatives, call themselves credit counselors. Make sure to ask the organization you are speaking to if they are a credit counseling organization. Ask if they have certified credit counselors staffed. I’d even recommend asking who they are certified with and do a bit of research. Protecting yourself now can help ensure your success in resolving your financial concern.
Credit counseling organizations typically hold a 501(c3) status with the IRS. This means that the credit counseling organization carries a nonprofit status. Credit counseling organizations that utilize the nonprofit status are held to higher standards by the IRS.
There are caps on the fees they can charge and it is expected that the credit counseling organization is designed to educate the public about debt. Check with the credit counseling company you are thinking of working with and ask them if they are a licensed nonprofit credit counseling organization, you should also feel comfortable in asking for a copy of their IRS letter that proclaims their nonprofit status.
I hope this information helps you make an informed choice on which agency to work with. Dealing with a difficult situation is tough enough and compounding that by not finding the right help, right away, can often make it tougher.
For full disclosure, I’ve worked in the credit counseling field for over 14 years and I currently work for a nonprofit credit counseling organization. I’m a certified credit counselor and have worked with many individuals, perhaps like yourself, find solutions to their financial needs.
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