What do Credit Counseling Services Do?

You’ve heard the hype.  You’ve heard the warnings.  Your credit card debt is looming, and now you’re wondering…What do debt counseling services do?  Can they help me?  Should I use one?

There are a variety of debt counseling and consolidation companies out there.  Some are non-profit, some are profit based.  Some receive payment from creditors (a fraction of the payment an individual is making), some receive payment from individuals directly.  Some are accredited, some are not.  You really need to do research and find out what is available in your area, what kind of reputation the service has, and how long they’ve been in business.

Beware of companies that make outrageous promises.  Most credit counseling services will help you set up a two to four year payment plan.  If it takes longer than that, be cautious.  It may be more realistic for you to claim bankruptcy or seek other assistance.  You should be able to see your plan from beginning to end and understand how it impacts you, your debt, and your creditors.  Don’t go along, just because you feel you have no other choice.

Beware of companies that are not accredited by the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.  Most legitimate companies will be associated with one of these two groups.  It’s also a good idea to check into the company’s background.  If you are working with a local service – is it a branch of a larger parent company?  What is the branch office’s reputation?  What is the parent company’s reputation?

Beware of companies that charge extremely large upfront fees or use your first monthly payment as their fee.  You don’t want to get mixed up with a company that will ask you for thousands up front and then disappear.  Again, understand exactly what it is going to cost you, up front and in the long run.  And, if you start noticing missing or late payments from your counseling service, start asking questions right away.  It is their responsibility to take your payments and pass them on.  If they don’t, that impacts you!

Bottom line is, don’t go into using a credit counseling service with your eyes closed.  Do your research.  Do your homework.  Ask questions whether you think they are dumb or not.  That dumb question could just save you, and there probably aren’t any questions you can ask that they haven’t already heard!

• Should You Use a Credit Counseling Service?
• Stop Your Debt Issues with CuraDebt Debt Consolidation
• Choosing a Christian Debt Consolidation Company