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Nonprofit Credit Counseling Agencies Think Twice Before You Leap
Nonprofit Credit Counseling Agencies
Think Twice Before You Leap
Consumers that deal with credit card debt sometimes find it necessary to
a get a little outside help. Consumer credit counseling agencies are a
great, free resource for consumers needing a little extra help with
budgeting, planning, or even setting up a debt repayment plan, otherwise
known as a Debt Management Plan (DMP).
But you may be wondering if you really need help. Here are some warning
signs to help you decide if it's time to start investigating a
non-profit consumer credit counseling agency.
Your own efforts at working out a reasonable repayment plan have failed.
- Based on your current budget, it will take longer than five years to
repay your credit card debt.
- Your total monthly debt payments, not including mortgage and car, equal
1/4 ? 1/2 of your take-home pay.
- Your are unable to pay even the minimum amounts due on each credit card
every month.
- You are consistently late with one or more regular bills other than
credit cards, including utility and auto bills.
- Creditors and collection agencies frequently call you.
- You and your spouse fight about debt and financial issues.
- You don't know if you can really afford to purchase something.
- Know What to Look for in a Credit Counseling Agency
With the assortment of agencies trying to get your business it can be
difficult to know which one is best. First things first, look for an
agency that is non-profit and accredited with either the National
Foundation for Credit Counseling or the Association of Independent
Consumer Credit Counseling Agencies.
It's also a good idea to contact the local Better Business Bureau to see
if any complaints have been filed against the company and how the issue
was resolved. Similarly, checking our active credit forum for posts
regarding the company is a good idea.
Finally, make sure they are licensed to offer services in your state and
that they don't require detailed information about your situation before
sending free informational material about the services they offer.
2. Know What They Offer
A reputable credit counseling agency offers many wonderful services
including assistance from a certified counselor who will help you create
a personalized budget and possibly a debt management plan (DMP); working
with creditors to lower or eliminate interest, finance charges, late
payment penalties, and other types of fees; distributing payments to
each of your creditors enrolled in your DMP; and, most importantly,
giving you lots of free educational materials.
3. Know How They Will Help You
The first step a credible counselor will take is thoroughly analyzing
your financial situation; plan for an hour long initial visit and
several follow-up sessions. Then, based on what they see, they can set
up a plan to help you both in the short-term and the long-term.
Sometimes long-term help involves a debt management plan (DMP), but not
necessarily. If the agency won't continue providing budget counseling
unless you sign up for a DMP, look elsewhere.
Another warning sign to look elsewhere is the unrealistic promise of
erasing your credit history. No one can erase your credit history. Under
the Fair Credit Reporting Act, accurate information about your accounts
stays on your report for up to seven years.
(Read Part 2)
By Amy L. Cooper-Arnold,
CardRatings.com
Staff Writer
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The Credit
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