If you have no idea what you wish to achieve no credit counseling can help you. Also, if you're considering using a credit counselor, shop around, and ask each agency the following questions. More importantly, be certain that you are comfortable with their answers before you book that first appointment. A legitimate agency is always more interested in your bottom line than theirs.
1. Is the agency able to assist you regardless of your location. Many agencies offer on-line debt solutions and can be located anywhere on the globe to provide you help. A state license is important if you enroll in a debt management plan because you must insure that you monthly payments are audited by a third party. Each state requires an insurance bond and annual escrow account audit that ensures your funds are safe. Examples of such requirements are annual audits by an independent CPA, written action plans provided to each consumer, and consumers provided with account statements at least quarterly.
2. If you are sending your monthly payments to a Debt Management Plan you want to know is the agency accredited by an independent third party? Self-accreditation is not the answer you want. An example of a reputable third party accreditation body is the ISO 9000, ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization. Such accreditation signifies that appropriate checks and balances are in place to protect you, the consumer.
3. Nonprofit or "for profit" makes little difference as long as you get the help you need. You must keep in mind your personal objectives and if a "for profit" organization is able to assist you more than a "non profit" then use the services of the "for profit" organization that offers you the most help. Remember the saying, "I'll pray to Christ, Buddha or Krishna and any God that can help". Being a nonprofit does not guarantee that the agency is legitimate.
4. What services does the agency offer? A wide-range of services is a good sign. This could include: budget counseling for those who are not in debt; debt counseling for those who may need professional assistance digging out; housing counseling for pre-rental, pre-purchase, first-time home buyer, reverse mortgage, and foreclosure prevention; and the mandated bankruptcy pre-filing counseling and pre-discharge education.
5. If you enroll in a Debt Management Plan, ask "what are the fees associated with the services provided"? The agency should be forthcoming about fees, and no fee should be assessed prior to the service being provided. Be wary if the agency says their fees are voluntary. Any set-up fee or monthly fee should be reasonable, usually defined as $50 or less, with monthly fees in the $25 range. Remember, you always get what you pay for in life, and nothing in life is free!
6. What delivery options are available to you for counseling? Does the agency offer in-person counseling? Counseling by phone? Internet counseling? Is the channel that's most appealing to you offered?
7. Is the counselor assigned to you experienced? You want someone qualified assisting you with your critical financial decisions. Use your inner feelings to determine if the response to your questions "resonate" with your inner most being.
8. Does the agency provide educational classes or workshops? Are any of these tools offered online? Is there a fee to attend? Will the agency work with all of your creditors? Some agencies only work with creditors who agree to make a payment to them. A legitimate agency will take a holistic approach to solving your financial distress.
9. Is there a minimum amount of debt required to be counseled? True credit counseling agencies will work with you regardless of how large or how small your debt may be.
10. What debt relief options are offered? If the only tool is the Debt Management Plan (DMP), keep shopping. A DMP is a useful tool, and is often the appropriate resolution. However, each consumer's situation is different, thus the solution should be customized to fit their specific needs. A one-size-fits-all approach signals that you should continue your search.
11. Are the counselors compensated for writing DMPs? Any such incentive is not a part of a legitimate agency's pay to their counselors.
12. How long will your counseling session last? Don't be tempted by "drive-by" counseling. A counselor simply cannot do an adequate intake of your income, expenses and debts in a short amount of time.
13. If you go on a Debt Management Plan, how soon after receipt of your monthly payment will it be disbursed to creditors? The success of a DMP depends on timely, consistent payments to creditors.
14. What happens to your first payment? Believe it or not, some agencies keep the consumers first payment and consider it a donation. Be sure to ask about this.
15. Will the full amount of your payment be disbursed to your creditors? The full amount should go toward the repayment of your debts, with no portion going into the agency's pocket.
16. How will your deposits be protected? Ask for written evidence that the agency is bonded or insured to protect the consumer from fraud or the agency's own financial difficulties.
As a last step, check with the Better Business Bureau to see if there are unresolved complaints about the Debt Management Plan provider you are considering. Anyone can file a complaint. What is relevant is how the agency resolved it.
Legitimate credit counseling agencies counsel and financially educate many consumers each year, making financial stability a reality in their lives. It all starts with knowing what you wish to acheive and selecting the right agency. Asking the above questions, and receiving the right answers, will ensure that your credit counseling experience is a positive one.
Finally, most so called "non profit" credit counseling agencies actually work for the credit card bank and not you the consumer. If your monthly payments are to be negotiated and reduced, there cannot be any set monthly payment amount. If the counseling agency gives you a predetermined monthly payment and tells you the credit card bank will not accept less, this is a red flag that the credit counseling agency works for the bank and serves their interest first.
"Legitimacy" means serving you and helping you reach your credit goals. To successfully get out of debt you must know what your goals are before contacting any consumer credit counseling agency for help.
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Consumer Credit Counseling provides FREE CREDIT COUNSELING to the public worldwide and FREE CREDIT REPORTS. Ask your credit question and get an expert answer 24 hours a day for help with debt consolidation, credit repair, unemployment and debts, debt settlement, wage garnishment, and court judgments. http://consumercounseling.org/howtoselectacreditco.html
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