How to Choose a Debt Counseling Service

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Selecting a Debt Counselor

In the past, almost all debt counseling was handled by non-profit community agencies. However, recently, for-profit credit counseling agencies have become more and more common. These debt counselors sometimes disguise the fact that they are a for-profit service, either by lying to the consumer or creating one branch of their organization that is indeed non-profit. The non-profit company then works to create revenue for the for-profit parent company.

The bottom line is that consumers need to choose their debt counseling service cautiously. A for-profit credit counseling service is by no means inferior to a non-profit service, as long as the company is honest about their status. Of course, a for-profit debt counselor will also be more expensive than a community based, not-for-profit counselor. Whichever you choose, make sure your service is candid with you about who they are and what you can expect from their services.

What to Ask Your Debt Counseling Agency

Before you sign up for debt counseling services, make sure you ask the company these questions:

• Are you nationally accredited? Some debt counselors are affiliated with the National Foundation for Credit Counseling (NFCC). This is not necessarily a prerequisite for quality, but debt counseling services affiliated with the NFCC tend to be more legitimate and trustworthy.
• Are you a 501c(3)? A 501c(3) is a non-profit organization. As we said before, you do not have to select debt counselors who work for a non-profit entity, but you should be aware if the company is a for-profit organization.
• What debt counseling services do you offer? A debt counselor may offer debt consolidation, debt management, credit repair, money management, budgeting advice, and a number of other services. Find out exactly what your debt counselor offers to determine if the service meets your needs.
• How much do your services cost? Request a complete estimate of how much the company will charge for debt counseling services. This should include all up-front and/or commission costs as well as whatever monthly fee the agency charges. Beware of debt counselors who require a large payment up front before any services have been rendered.
• Are your debt counselors certified by the NFCC? The certification for a credit counselor is a Certified Consumer Credit Counselor designation offered by the NFCC. Debt counselors who have attained this certification have passed a number of tests on financial matters. If this is important to you, seek out a debt counseling service with certified counselors.