Credit Counseling Agencies

There are times when it doesn’t matter what you do, you just can’t seem to get out of debt, but there are places you can turn to.  Credit Counseling Agencies have been helping people for year.  You just need to know what to look for, so you get a good one…Most people aren’t aware that a lot of the credit counseling agencies get their funding from fees that creditors pay them.  In other words, a lot of these agencies get paid to sign you up under their “debt management program”

So the first thing you want to ask any credit counseling agency you contact is this:  Do you offer debt management programs (DMP)?  If they say yes, don’t use them.  They are not going to be able to help you out the right way.

You want an agency that is looking out for your best interest.  One that help you get out of debt and not one that is helped by the bill collectors.

Here are two agencies that don’t offer the DMP services:

The Institute for Financial Literacy

and

Hummingbird Credit Counseling

Some other questions, you should ask are:

1. What fees are involved (set up/monthly fee, etc).  Make sure you get this in writing.  An agency should be willing to help you even if you can’t afford to pay.
2. Will I have a written contract?  Read everything before you sign it and don’t take their word as to what it says.  And if they have said something verbally, make sure that is in the contract.  The written word is what you will have to follow, what will be legal and binding.
3. Do you have a license to operate in my state?  Ask to see the license and/or make sure you have something in writing that you can have that states they are.
4. How qualified and/or trained are you counselors?  You want to look for an agency that train their counselors by an unaffiliated party.  Which means you want an independent training facility and not training in house passing out the counselors certificates.
5. Is all information about me kept private?  Make sure they don’t sell your name and information to outside companies.  And you should sign a privacy protection form of some kind. (Like you do at the doctors, etc)
6. Is there a compensation program for your employees?  Meaning, if you sign up, do their employees get a higher percentage of pay, or a percentage of a fee, if you have to pay one, etc.

When is bankruptcy the answer?

If your consumer debt is more than 25% of your annual income, then bankruptcy might be your best choice.