Choosing a Credit Counselor
There are truly a lot of bad guys in this business so it is crucial to make sure that the credit counseling service that you choose to deal with is legitimate.
Here are some things you need to consider before signing up to work with a credit counselor --
• Is it accredited? Don’t agree to work with a company unless it is affiliate with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. You can also find a list of agencies affiliated with the National Foundation for Credit Counseling at www.nfcc.org or www.aiccca.org.
• How do regulators rate it? At a minimum, make two calls – one to your local Better Business Bureau and one of your state attorney to find out how many consumer complains have been made about the agency and if there is any regulatory action against them. If there is action, forget about it.
• How does the credit-counseling agency describe itself? If it describes itself as a credit counseling service that will have no negative impact on your credit or as one that promises to settle your debts for less than you owe then that is a sign that you are not dealing with a legitimate operator. This is because those promises are not realistic.
• What kind of fees are involved? Legitimate credit counselors charge about $50 to set up your plan. If you are paying more than that you are probably paying too much.
• When and how much will creditors get paid? Missing or late payments can destroy your credit score. Make sure you get in writing how much of each monthly payment will go directly to your creditors, what the cut is to the counseling agency and on what exact dates the payments you make will arrive at your creditors’ office.
Sometimes you do find an excellent credit counseling company but after the numbers are crunched, you may not have the resources to pay off your bills in five years. This is when the credit counseling company usually takes your money, gives up on you and then will tell you to explore other legal options, such as talking to a bankruptcy attorney.