Choosing a credit counselor

Most credit counselors or counselors offer their services through local offices, on the Internet or by telephone. Where possible, look for an organization that offers in-person counseling services. Several universities, military bases, credit cooperatives, housing authorities and subsidiaries of the US Cooperative Extension Service. they operate non-profit credit counseling programs. You can also turn to information and referrals from your financial institution, the local consumer protection agency, and family and friends.

But be careful because the fact that an organization presents itself as a “non-profit” entity does not guarantee that its services are free, accessible or even legitimate. In fact, there are some credit counseling organizations that charge high fees, which are often hidden, or that pressure consumers to make “voluntary” contributions that can cause even more debt.

How to choose a credit counseling organization

How to choose a credit counseling organization

Well-reputed credit counseling organizations advise you on how to manage your money and manage your debts, help you develop a budget, and usually offer you free educational materials and workshops. Its counselors are certified and trained in issues of consumer credit, money and debt management, and budgeting. Counselors talk with you about your overall financial situation and help you develop a customized plan to solve your money problems. Usually, an initial credit counseling session lasts about an hour and may offer some other follow-up sessions.

A self-respecting credit counseling organization should send you free information about itself and about the services it provides without first asking for any details about your situation. When a company does not act in this way, consider this information as a red alert and ask for assistance elsewhere.

Once you develop a list of possible credit counseling organizations, check your reputation with the office of your state Attorney General , local consumer protection agency, and the Better Business Bureau. They can tell you if other consumers have filed complaints about those organizations. (But even when they do not register any complaints against these organizations, there is no guarantee that they are legitimate.) 

List of questions


These are some of the questions that can help you find the best counselor for your case.

  • What services does it offer? Look for an organization that offers a wide variety of services, including advice on budgeting and savings and money management classes. Avoid making deals with organizations that insist that your only option is a debt management plan before taking the time to analyze your financial situation.
  • Do you offer me information? Do you have free educational materials? Avoid making deals with organizations that charge you to give you information.
  • In addition to helping me solve my immediate problem, will it help me develop a plan to avoid problems in the future?
  • What are your charges or fees? Are there initial charges and / or monthly fees? Ask them to give you the quote for the price of the services in writing.
  • What will happen if I can not pay the charges or make contributions? If an organization does not give you help because you can not pay, get help elsewhere.
  • Will I have a formal agreement or contract written with you? Do not sign anything without reading it first. Make sure all verbal promises are written in the contract.
  • Are you licensed to offer services in the state where I live?
  • What are the qualifications of your advisors? Do they have accreditation or certification granted by an external organization? Who granted the licenses or certifications? If your organization does not have a license or accreditations, what type of training did your advisors receive? Try to use the services of an organization whose advisors have received training from an external and independent entity.
  • What security do I have that my information (including my address, phone number and financial information) will be protected and kept confidential?
  • What type of remuneration do your employees receive? Will you be paid more if I accept certain services, if I pay a fee or if I make a contribution to your organization? If the answer is affirmative, consider it a red alert light and seek help elsewhere.

Debt management plans

If your financial difficulties stem from excessive indebtedness or your inability to repay your debts, a credit counseling agency can advise you to enroll in a Debt Management Plan (DMP). A debt management plan alone is not considered as credit counseling, and these plans are not an appropriate option for all people. Consider enrolling in one of these plans only after a certified credit counselor has taken the time to thoroughly review your financial situation and offered you personalized advice on managing your money. Even if a debt management plan is determined to be right for you, you can still get help from a reputable credit counseling organization to make a budget and to teach you how to manage your money.

How debt management plans work

How debt management plans work

Every month you deposit money with the credit counseling organization. The organization uses your deposits to pay your unsecured debts – your credit card bills, student loans and health care bills – according to a payment program that the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or exempt you from paying certain charges, but check with each of your creditors to be really sure that the concessions described by the credit counseling organization are offering you.

For a debt management plan to be successful, you need to make your payments regularly and on time, and completing the plan usually takes 48 months or more. Ask your counselor to estimate the time it will take to complete the plan. In addition, you may have to commit to not requesting – or using – additional credit while you are enrolled in the plan.

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