Trauma Survivors Network - provided by ATS

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A Program of the ATS

Credit Counseling

If you are in debt and finding it difficult to pay your bills, credit counseling can be a financial lifesaver. The right counselor can advise you on how to use credit wisely; help you establish a workable budget, keep track of your bills and manage your money; and, if appropriate for your situation, arrange a repayment plan with your creditors. In short, a trained and certified specialist can place you on the track to financial security.

Once you have selected a reputable credit counseling agency, you will be asked to provide information about your income, expenses and debts. The counselor should analyze the information, discuss your situation with you and make recommendations to help you address your financial problems. These suggestions may include participation in an educational class, enrolling in a debt-management/repayment plan, or referral to another organization, such as a relationship counseling or state employment agency, for assistance to address any non-financial situations you may be experiencing.

If you decide to work with a credit counseling agency, spend some time researching your options and take care to select a reputable agency. Your goal should be to find a credit counseling agency that has satisfied clients, offers personalized service from trained counselors, can educate you how to make appropriate financial choices and will provide you with the tools you need to achieve financial security.

Tips on Finding a Credit Counselor

Carefully evaluate advertisements. Just because a credit counselor has a big advertising budget does not necessarily mean it is the best! Also, you would be wise to ignore telephone calls or e-mails that arrive "out of the blue" from credit counselors offering their services. Good credit counselors often rely on past clients for referrals; they do not need to solicit business through constant television advertising, infomercials, telemarketing or spam e-mails.

Interview several agencies. If you know someone who has used such an agency in the past, ask them for a recommendation. Or, ask friends or relatives who they would consider if they needed budgeting advice. You can also find credit counselors in the Yellow Pages, by contacting the National Foundation for Credit Counseling ( or the Association of Independent Consumer Credit Counseling Agencies ( for a list of members or by using an Internet search engine.

Is the agency licensed and accredited? Many states require that a credit counseling organization register or obtain a license before offering credit counseling, debt management plans and similar services. Do not hire an organization that has not fulfilled the requirements for your state. Also, ask if the firm is a member of the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies and double-check that information at the respective Web site. Agencies that are members of these organizations must adhere to strict standards of professionalism and accreditation and use only certified credit counselors.

Consider the qualifications of the counselors. Ask if the counselors are certified and by whom? Try to select an agency whose counselors are certified by an outside organization. You will also want to ask how the agency's employees are paid. Steer clear of organizations that pay employees a commission; that might well influence the number or nature of services they decide you need.

Are services personalized? A cookie-cutter approach most likely will not address your financial situation. Find out if the counselor will devise a plan tailored to fit your personal circumstances. Also, think beyond your immediate credit/debt problems and find out if the agency will offer you advice on avoiding problems in the future.

What about privacy and security? What assurances do you have that the agency will keep information about you confidential? Does the agency have a privacy policy and are you comfortable with its terms? If not, select another agency. Security practices are also of importance. How does the credit counselor protect the security of client information?

Gain a clear understanding of the services offered. You should seek an organization that offers a range of services. For instance, ask if the services include educational classes or counseling and on what subjects. Will you have the opportunity to discuss your financial situation with a counselor and receive assistance in developing a personalized plan? What sort of services do they provide regarding debt repayment plans?

Check their complaint records. Contact your Better Business Bureau (, state Attorney General and local consumer protection agency to find out about specific credit counseling organizations' records. If consumers have filed complaints against the firm or if the counselor has not been responsive to complaints; that could indicate problems.

Get verbal promises in writing. Only do business with agencies that offer formal written agreements or contracts. Carefully read through the terms of agreement or contract. It should describe in straight-forward fashion the services to be performed; the payment terms for these services, including total cost; how long it will take to achieve results; any guarantees offered; and, the counselor's name, business name, address and contact information.

Fees. Get a clear presentation of the fees you will be charged. If there are fees (set-up fee, monthly service charges), the agency should explain what they are based upon. In general, you should not expect to pay more than $75 in set-up fees or make a monthly payment that exceeds $40. This monthly payment fee is subject to state law, and the agency representative should be able to tell you the specific regulations for your state of residence. The agency should also be willing to advise you how your funds will be protected. Finally, consider the total of the various fees; when added to your monthly debt, will the cost defeat your efforts to pay down your debt? If you are financially destitute, ask if the organization waives or reduces fees for people in your circumstance. If not, look elsewhere.

Ask how the agency is funded. Most credit counseling agencies are partially funded through voluntary contributions from creditors who participate in Debt Management Plans. (Creditors have a business interest in receiving their payments, so most of them are willing to help support participating credit counseling agencies.) Go elsewhere for assistance if the credit counseling agency refuses to discuss its funding sources. If the agency claims to be tax-exempt or not-for-profit, double-check with your state charity official (for contact information, visit the Web site of the National Association of State Charity Officials at Some credit counseling organizations using questionable practices have sought tax-exempt status in order to circumvent consumer protection laws. Finally, bear in mind that regardless of how the agency is funded, your creditors should always be credited with one hundred percent (100%) of the amount you pay through a credit counseling agency.

Are budget and credit education opportunities offered? Reputable organizations are willing to help you manage your finances through counseling and education. Ask if the agency offers workshops or educational materials. Are they available for free? Are they accessible online or can the materials be mailed to you? If the agency insists that a debt management plan is the only option for clients, look elsewhere.

Better Business Bureau

Associated pages

Debt Management Plans
Credit Report