Consumer Credit Counseling
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Due to the increase in consumer debt and the corresponding increase in individual bankruptcy, consumer credit counseling agencies are springing up all over. Before you commit to working with any particular agency there are some things you need to know.
Nonprofit
Many credit counseling agencies are nonprofit agencies. “Nonprofit” is a term that designates an IRS tax status. It does not mean that the agency is not trying to make a profit. Some credit counseling agencies have sliding scale fees, some are free and some are quite expensive. “Nonprofit” has nothing to do with the affordability or even the legitimacy of the services provided. Some counseling agencies advertise very low fees but they pressure consumers to make “voluntary” contributions thus creating more debt for the consumer.
Choosing a credit counseling agency
Do some homework when choosing a credit counseling organization. Just because they have a large organization or several local offices doesn’t mean that they will deviate from a cookie cutter approach to meet your individual needs. Likewise just because an agency may be small doesn’t insure that you will get quality help. Many credit unions, housing authorities, military bases and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Ask your bank, the local consumer protection agency, your family or friends. If you have noticed a positive financial direction in someone’s life ask him or her about it. Before signing any agreement, check out the agency with the Better Business Bureau.
Reputable agency
A reputable consumer credit counseling agency will advise you on managing your money as well as your debt. The agency should help you develop a budget, and have free educational materials. You want the person that is helping you with your financial health to be a trained certified counselor in the areas of money, debt management, budgeting and consumer credit. The counselor will look at your entire financial life while helping you develop a personalized plan to manage your money and build wealth. When looking for a credit counseling agency think about the fact that you would not want wealth building tips from your destitute brother-in law.
In-person counseling
If at all possible find an agency that offers in-person counseling. This is the most preferable form of credit counseling. Your introductory session should last about an hour at which time they should propose a follow up plan. You will want to check the agency’s references and see evidence of a proven track record. An agency might offer in-person counseling while also offering phone counseling. Once you are on solid footing then phone counseling, just to make sure you are staying on track, is a viable option.
Internet counseling
If you find that you are just not able to create a workable budget, or track your expenses and you enjoy using the Internet, then online counseling and their accompanying budget forms may be helpful. Some agencies offer only online counseling or phone counseling while others offer a combination of forms of counseling. For someone, who does not have a reputable agency close by, Internet counseling may be a valid choice.
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