Featured
Personal Finance
Title

Pre-order your
signed copy now!:
"Mutual Funds for the Utterly Confused" (McGraw-HIll, December 2008)

Visit our blog
Retirement with a Plan

International Foundation of Employee Benefit Plans says "The book explores the importance of time and retirement philosophy in making a retirement plan."
Read the review

Signed copies
on sale:

You ad could be here

What a Credit Counselor can do

If you have contacted your creditors before you missed a payment or were late on one and they were unwilling to negotiate with you, you may need to turn the problem over to a professional.

if you are having difficulty making sense of your debt obligations - and even though you may not have missed a payment - the feeling that one financial slip will make the need to seek counseling imperative.

But finding a credit counselor is not as easy as it may seem. This is growth industry with numerous "financial planners" retraining and renaming themselves as credit counselors. You will face the same problems when dealing with this group during tough economic times as you would have during good.

Here's a list of things you should look for:

Accreditation
Look for counselors affiliated with the AICCCA or have a NFCC Membership, The standards and training required by The Association of Independent Consumer Credit Counseling Agencies (AICCCA) and the National Foundation for Credit Counseling (NFCC) should leave you feeling better about your choice. But just because they have received the nod from these groups does not make the fees they charge standard.

Some agencies will offer you their ISO 9001 Certification or Council on Accreditation (COA). Having this means that they have successfully completed independent audits to ensure that they are complying with all the industry standards.

Others will simply bill their services as credit counseling offering certification from Association for Financial Counseling and Planning Education (AFCPE). You need to be most wary of this group. These counselors are driven by the fees they generate and sometimes receive a bonus for rolling your current financial products over into products that they represent.

Reasonable and Acceptable Fees

You are in financial trouble and because of this, you are extremely vulnerable to sales pitches that prey on that weakness. Never pay more than $50 for the consultation or monthly fee.

Never let them keep the first months payment on a debt management plan (which can be quite sizable). If they hold any payments, it should be kept in a trust fund and should clear that holding period within ten days. Some unscrupulous counselors will hold the payments too long, creating late payments that further damage your credit report.

A clearly stated debt management plan should have an end date - usually within five years. Debt management plans are costly and should be the last option the counselor offers. Education should be free allowing you to make the choice of whether to contract with them or not. If you feel any pressure - get up and leave.

Because counselors come in two basic flavors - profit and non-profit, ask if they are contracting any of these service to another outside source. Non-profits will not do this.

And fees that are too low are also suspect. This usually means the fees will be hidden in new loans or money back offers.

A Contract you can live with

Your counselor should offer you a clearly stated agreement between you and the agency. This is a serious commitment and should not be undertaken if you have second thoughts. It should include:
• Full disclosure of the amount of your fee or contribution that will outline your total costs over the course of your enrollment in the program.
• The contract should offer details and descriptions of the services to be provided
• If you live up to your end of the deal, the contract should offer some relatively good estimates of the payoff schedule for the debts
• Should you want to end the agreement, the contract should offer a disclosure of the termination provisions of the agreement
• And lastly, if you feel as though you misrepresented or did not receive what the counselor promised, the contract should include options for the resolution of disputes

The Same Goals

You should feel good about your relationship with your counselor. You should see it as a way to improve your financial stability, help rid you of your personal debt management problems and set the course for the rest of your life, beyond the contract.

To find an accredited agency you can call 866.703.8787 or click here to find an agency near you

Do you need a credit counselor?