These are the common questions that are asked to establish the legality and the genuineness of a credit counseling service before you place your finances on their hands.
Is the credit counseling agency affiliated with a nation credit union?
Is the credit counseling agency affiliated to any of the national credit bodies such as the AFCC ( American federation of credit counseling)? Being affiliated to a credit union mean that the credit counseling agency has to operate under stringent guidelines and rules.
Is the agency accredited by a 3rd party?
Being accredited by an accreditation body like the Council On Accreditation means that appropriate checks and balances are in place to safe guard your interest.
Is the agency a 501(c)(3) non profit organization
A no profit status is required for credit counseling agencies to function in several states. Being non profit means that the agency will be able to provide you with a majority of basic credit counseling services for no or very low fee.
What services does the credit counseling service offer?
The agency should offer services beyond enrolling the consumers in a debt management plan. A wide range of services such as housing counseling, pre-bankruptcy counseling, credit education, budgeting and financial planning.
What are the fees associated with the counseling?
A legitimate non profit agency will be able to provide you with several services at a low fee or free of cost. The agency should clearly specify the fee involved. Watch out mandatory voluntary donations.
What are the means of delivery?
Does the agency offer counseling over the phone, internet and face to face? Most of them do.
Is the credit counselor assigned to you a certified consumer credit counselor?
Make sure that someone properly trained and informed is assisting you with your counseling. Accreditation with NFCC means that a counselor has to pass tests before they can be certified as fit to be a credit counselor.
Does the agency provide credit education and workshops?
A good credit agency might make it a mandatory process to be a part of a credit education workshop in order to assure that you remain debt free in the future.
Will the agency work with all your creditor?
A credit counseling agency receives a majority of its funding from the creditors from what is called the fair share. Fair share is a percentage of the amount that the creditor recovers from the consumer as payment from a debt management plan. The credit counseling agency should be willing to work with creditors with whom they do have a fair share agreement with as well.
Is there a minimum amount of debt involved?
A good credit agency will not a set a limit on the debt owed below which they will not assist the consumer.
What are the debt management options available?
Debt management plans are not required by all the consumer. A credit counseling service should be wiling to offer you a budgeting and financial planning service if that is sufficient help for you to get out of your debt.
Do the counselors receive incentive to write debt management plans?
The counselors should not be independently rewarded for getting consumers in to a debt management plan.
How long will the counseling session last?
The counseling session should be long and comprehensive enough for the agency to grasp and evaluate your finances properly before giving you the appropriate solution. Agencies that promote drive by counseling may only be interested in enrolling you for debt management plans or charging you a high by making tall and exaggerated promises.
Will the agency take on the payments in a debt management plan with immediate effect?
There should be no gap between the time that you stop paying your creditors and the agency takes over the payment in a debt management plan. No payments should be delayed or missed.
Does the agency pocket the first or the first few payments as fee?
A legitimate counseling agency will start disbursing the payment to your creditors right from the first payment. Some unethical practices involve the agency keeping the first few payments themselves as fee for providing the service without making the consumer aware of it. this will result in your accounts that are current being reported as late to the credit bureaus.
Is the credit counseling agency insured?
The credit counseling agency should be insured to safeguard the money you pay them against their own financial troubles.
Are there many complaints against the agency?
Check the website of the Better Business Bureau and the local offices of your state’s attorney general. While you can expect to find complaints most of them should have been resolved to the satisfaction of the consumer.
Is the counseling session confidential?
Most of the legitimate credit counselling agencies including the ones that are affiliated to The National Foundation of Credit Counselling guarantee absolute confidentiality and privacy. Your financial situation should not be discussed beyond the people involved in assisting you and all your records should be maintained in secure facilities.