If you’re living paycheck to paycheck, or are currently getting calls from debt collectors, it may be time to get the professional services of a non profit credit counseling agency. Not only can a credit counselor help you sort out your debts, get a one time credit report and also help you develop a workable budget.
Credit counseling organizations can either be ‘non profit’ or ‘for profit’. For-profit organizations charge a certain fee for their services, while non profit credit counseling services are offered free of charge. However, take note that just because an organization claims it is non profit doesn’t guarantee that its services are absolutely free or are legitimate.
Before looking for non profit credit counseling, beware of some agencies that charge high fees, which could be hidden charges. Some unscrupulous organizations may require you to make a ‘voluntary’ contribution before service, which may lead you to further debt.
Where can I get quality counseling services?
Credit counselors do their business through their local offices, in the Internet, or over the phone. However, it’s advisable to select a non profit credit counseling organization that offers its services face-to-face. There are many public institutions that operate credit counseling services. Some of these are run at universities, military bases, credit unions, housing authorities, and local branches of the US Cooperative Extension Service.
Nonprofit counseling agencies may also get their funding from grants and donations by private sources and foundations, contributions from partner creditors in its debt management plans, or from client fees and contributions. You may find information about nonprofit credit counseling and get referrals from your bank/lending agency, government consumer protection agency, or from family and friends.
What Can I Expect To Get From Credit Counseling?
1. Advice and education on money & debt management
Counseling organizations give you non-judgmental advice about managing your finances and debts, help you to develop a workable budget, give you free reference materials, and invite you to debt management workshops for free. They have counselors who are trained and certified in consumer credit, money and debt management, and budgeting.
2. Help you develop a plan
Counselors discuss your financial situation with you, and help you develop a plan to get out of debt. The first counseling session usually lasts an hour. The counselor may then schedule follow up sessions, and give you educational materials on money and debt management.
Depending on your situation and the particular opinion of the credit counselor, you may be offered a debt management plan or a debt settlement program to get you out of the hole.
3. Information about the agency and their services
A reputable firm will give you free information about itself (for example, where they get funding and if they have partnerships with credit companies)and its services. At this point, the non profit credit counseling agency should not require you to give any details about your financial situation. If they ask for personal financial details this early, you should consider it a stop sign and start looking for other agencies.
Aside from counseling, the agent may also offer a debt management plan or debt settlement service for your consideration.
What questions should I ask the counselor?
Before letting them in on your personal financial situation, here are some questions you should be asking to find a non profit credit counseling service that’s right for you:
1. What services do you offer?
Find an organization that offers budget counseling and financial education. Avoid agents who sell you the idea of a debt management plan as your only option, before doing a thorough review of your financial situation. Remember, some non profit credit counseling organizations and second rate free government credit score programs(see website) operate with funding from companies that offer debt relief plans, so this particular type of advice may not be entirely objective. Make sure they work with real world credit score numbers and not estimates or non-FICO based scores.
2. Do you give information for free?
Educational materials should be free; try to avoid counseling agencies that charge for them.
3. Aside from getting me out of this debt situation at hand, will you help me make a plan so I won’t get stuck again?
Non profit credit counseling is not about giving fish, it should be about teaching how to fish and how to successfully swim in rough financial waters.
4. How much do you charge?
Get a price quote printed out for you. Ask if there is any set-up or recurring fees for their service.
5. What if I can’t afford to pay?
If an agency refuses to help you because you can’t pay, consider looking for other organizations.
6. Do I sign a formal agreement or contract?
Make sure any promise made by the agent is in writing. Also, carefully read the fine print if you are asked to sign anything.
7. Are your counselors certified?
Ask if their counselors are accredited by outside organizations, and ask what organizations these are. Inquire about the training of their counselors.
8. How do you pay your employees? Do they get a bonus if they get me signed?
If an organization gives bonuses to its employees for signing up or collecting a contribution/fee from prospective clients, consider it a red flag and look for counseling elsewhere.
9. Will the personal information I provide be protected?
Ask what measures are implemented by the non profit credit counseling agency to keep your personal records (address, telephone number, financial information) confidential and secure.