Find a Consumer Debt Counseling Service Right for You

Until June 2007, I worked for one of America’s largest subprime mortgage companies.  Needless to say, I saw my fair share of people with credit problems.  I also found out how hard it is to find a debt counseling service you can trust.  Time and again I saw my clients being ripped off by dishonest counselors that promised the moon.

Most advertisements for consumer debt counseling are scams that prey on desperate people with bad credit.  By following a few simple suggestions, you’ll be able to avoid these scammers and find a reputable debt counseling service that’s right for you.

Visit the National Foundation of Credit Counseling (NFCC, http://www.nfcc.org) online

The NFCC has been in business for over 50 years and they have a rigorous accreditation standard that their member companies must meet.  Their website offers valuable information about the consumer debt counseling process, as well as the ability to search for an accredited member in your area.  You can then browse the search results where a list of fees for various debt counseling services is disclosed.

Don’t be afraid to ask questions

A pushy salesperson is one of the surest signs that you’re dealing with a bad credit counseling service.  Your credit counselor should be willing to craft a solution that solves your specific debt problems, and they should always be willing to answer questions, such as:

1.) Are you affiliated with a national accredidation agency?  If you went to NFCC to find your debt counseling service, you already know the answer to this.

2.) Are you a 501(c)(3) non profit? Just because a company says it offers “non profit debt consolidation services” doesn’t mean they’re legitimate, but it’s generally a positive.  Remember that this should never be the only criteria you use to judge which debt counseling service to use.

3.) What services do you provide? It’s a good sign if a wide range of services are offered.  Look for services such as budget counseling, debt counseling, housing counseling, and bankruptcy counseling.

4.) How much will services cost? If there is hesitation to discuss fees, that’s a red flag.  A reputable debt counseling service will generally offer their services for less than $50 as a one-time fee or around $25 for ongoing monthly fees.

5.) How will counseling services be provided?Phone, internet, and in-person counseling are all possibilities.  Consider what is best for your situation.

6.) Does the agency offer educational workshops? Most legitimate agencies will offer debt counseling seminars to the community for free or at a reasonable rate.

7.) Will you work with all of my creditors? Don’t trust anybody that refuses to work with all of your outstanding issues.  True debt counseling agencies are looking for an answer to the whole problem.

8.) Is there a minimum amount of debt required? Again, this is a big warning sign.  Consumer credit counseling should not be dependent on the amount of debt you currently have.

9.) What debt counseling services do you offer? Avoid companies that only offer a Debt Management Plan or DMP.  There are times when this is the best solution, but it is not appropriate to channel every client toward a DMP.

10.) Are your counselors paid for writing DMPs? This sort of incentive is not something any legitimate debt counseling service would include in a compensation plan.

Just hang up

If you feel like you’re being pressured by someone and you’ve asked politely to get off the phone, feel free to hang up.  This is especially true of unsolicited calls because many of these salespeople aren’t allowed to hang up on you.  Their company has paid for you as a “lead” and they’re forced to keep trying to sell you until you get off the phone.  It’s a terrible business practice that mostly preys on the elderly and exceptionally nice people.

Do your homework

Before you finalize your decision to work with a specific consumer debt counseling service, check with the Better Business Bureau and your state Attorney General.  If there are any complaints you’ll want to see how the company resolved them.

Do you have a question about a debt counseling service?  Any other questions regarding credit issues?  I’m always happy to help!  Just leave a comment and I’ll get back to you as soon as possible.