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New Mexico and Southwest Colorado

Educational Consumer Tips

Credit & Debt Counseling

Author: Better Business Bureau
Published:
Category: Finance

If you are overwhelmed or consumed by debt, you may be interested in the relief a credit counseling agency can provide. A credit counseling agency hires counselors that are trained in money and debt management and budgeting. Use these tips as a guide when choosing a credit counseling agency to help manage your debt.

Tips for Choosing a Credit Counseling Agency:

Research Agencies.  Get recommendations from friends and family members who have received budgeting counseling. Check out credit counseling agencies at bbb.org to read reviews and complaints.  Ignore offers from agencies that all of a sudden contact you by phone or email.

Check Credentials. Look for agencies who are members of the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Agencies that are members of the NFCC or AICCCA must be certified and abide by strict requirements. Make sure the agency is licensed and registered with the state. Look for an agency that hires counselors that are certified outside of the organization. 

Think About Location. Although most agencies offer their services online and by phone, it is best to find an agency in your area that provides services in-person. Check if your local universities, military bases, credit unions, and housing authorities operate credit counseling organizations.

Understand the Services. Most counseling organizations can offer advice on managing money and debts, developing a budget, and can provide free educational material and workshops. Look for an organization that can offer a wide range of these services and keep all personal information confidential. For an initial meeting a counselor will meet with you for about an hour to discuss your financial situation and any money problems you are going through. The counselor will then meet with you for follow-up sessions to create an individualized plan to work through your financial issues.

Ask About Fees. Most dependable credit counseling services are non-profits, but this does not mean that their services are free. If you are purchasing a debt management plan (DMP) the fee should usually be no more than $75 upfront and $40 for the monthly payment. The DMP generally takes 30 to 60 months to be completed successfully. If you believe you will have difficulty paying for the plan ask if the agency can waive or reduce the fees. Avoid organizations that charge for basic information about their services or organizations that don’t disclose how employees are compensated.  

Get Everything in Writing.  Make sure the agency puts all verbal promises in writing. If you are committing to a DMP make sure it is in-person and all the details are in writing. Read the contract thoroughly before signing. The contract should include: contact information of the business and counselor, the services to be performed, and the payment terms.