Questions For Potential Credit Counselors

It is always a good idea to know what services the company offers. The best way to know what services they offer is to ask them.

As stated earlier, you want an organization that offers a range of services, including budget counseling, savings and debt management classes, and counselors who are trained and certified in consumer credit, money and debt management, and budgeting. This way, you get the biggest bang for your dollar.

You should also want the counselors to discuss your entire financial situation with you. and not just your debt. It is wise to ask for help to develop a personalized plan to solve your money problems now and avoid others in the future. This is smart on your part. You want to get out of debt and stay out of debt.

When you contact a counseling agency expect to spend an hour or so with the potential counselor. A good firm offers follow-up sessions and doesn't try to push you into committing to a DMP on the first call.

Remember that gut feeling mentioned above? You should feel it if an organization tries pushing a debt management plan as your only option before they spend any time analyzing your financial situation.

The reason you want as much information and help as possible during the first and few subsequent sessions is that a DMP is not for everyone. Your situation may be such that a full blown DMP is overkill. Maybe just reworking your budget and/or making an extra payment or two will straighten out your problem.

Because many states require an organization to register or obtain a license before offering credit counseling, you should ask if they are licensed to offer these type of services in your state.

The most obvious advice is not to hire an organization that has not fulfilled the requirements for your state.

Another good question to ask the person on the phone is if they offer free information. If they say no, hang up and look for another organization. Any organization that charges for information about the nature of their services is probably extremely expensive and may put you further in debt and not solve your problem in a timely manner.

You will definitely want a formal written agreement or contract. Always ask if they put everything in writing and in easy to understand language. Do not make any commitments over the phone and get all verbal promises entered into the contract.

It goes without saying, but we'll say it anyway, be sure to read all the documents the company sends you very carefully before you sign them. As was stated earlier, if you are rushed or being pushed into acting immediately, you may be better served by another organization.

Be sure these questions are on your list:

1) What are the qualifications of your counselors?
2) Are they accredited or certified by an outside organization?
3) If so, which one? If not, how are they trained?

The better credit counseling agencies use an outside organization with whom they are not affiliated to do the training. This encourages an objective approach for potential clients.

Most consumers want to know if other consumers been satisfied with the service that they received from that particular organization. Therefore it makes sense to do your homework before you actually sign any contract.

If you have identified a credit counseling organization that suit your needs, it is a good idea to check them out with your state Attorney General, local consumer protection agency, and any other consumer protection agency with which you are familiar.

Part of the mandate of these organizations is to inform consumers about complaints filed against this organization. They also can tell you the other organizations that have complaints filed against them.

Keep in mind an absence of complaints doesn't guarantee legitimacy or honesty. However, if there are complaints from other consumers that should serve as an alert to potential problems.

You should also know ALL of the fees the organization charges. There may be set up fees, monthly fees, payment fees, etc. Get a detailed price quote and fee schedule for your particular situation or DMP in writing.

Should the fees be greater than what you believe you can afford, ask if they can waive or reduce fees. Don't feel pressured into accepting a fee structure that will only worsen your debt load. By the same token, if an organization won't help you because you can't afford to pay, that is a sign you should look elsewhere for help.

An organization may pay their people a salary plus commission. They may also have other incentivized plans. For example, if the counselor gets you to sign up for certain services or pay a fee of some sort, the counselor gets a percent of your payment.

You will want to know how the employees are paid. Commissions and incentives have a way of influencing the type of services you will receive.

Another point you should know is that many credit counseling organizations receive additional compensation from creditors if you enroll in a DMP. For example, credit card companies pay credit counselors a head fee, i.e. so many dollars for every person having their credit card who signs up for credit counseling.

It is a strange world so you need to know the compensation structure. If the organization will not disclose what compensation it receives from creditors, or how employees are compensated, go elsewhere for help.

In this day and age of consumer privacy, you will want to know what the company does to keep your personal information confidential and secure. Remember, you will be giving them some very sensitive data about you. If it falls into the wrong hands, you could wind up a victim of identity theft.

Credit counseling can be more than just reworking a budget or making extra payments. It can be as extensive as completely redoing you whole financial life. You may need a complete financial makeover under the guidance and help of a professional counselor.