It’s important for Americans burdened with high levels of personal debt to make the right choice when seeking reliable debt help . The National Foundation for Credit Counseling (NFCC) offers some excellent debt relief advice.
Non-Profit Credit Counseling Agencies
It’s very easy to be seduced by the label “non-profit credit counseling agencies” but people must beware. Businesses “may be more interested in their own bottom line than in helping their clients,” said a US Senate investigating committee in 2005 (NFCC).
Some credit counseling agencies that display the non-profit marker may simply be generating the profits for other organizations affiliated to them. There are of course non-profit agencies that offer an excellent, free or very low cost service to those in debt.
Questions to Ask a Credit Counseling Agency
- Is the business affiliated with a national body like the NFCC or an independent third party such as the Council on Accreditation (COA)?
- Is the agency a non-profit community organization? NFCC have said: “Non-profit does not guarantee that the agency is legitimate, but it’s a step in the right direction.”
- What are the fees charged by the agency? NFCC have advised that all fees should be reasonable, set up fees are usually $50 or less and monthly fees around $25. “The agency should be willing to waive all fees in cases of true hardship.”
- Who are the directors of the business? The directors, who should not be paid, should come from a wide cross-section of the community.
- Is the counselor a Certified Consumer Credit Counselor?
- Are counselors paid for the number of debt management plans they write? NFCC say: “Any such incentive is not part of a legitimate agency’s pay to their counselors.”
- If a debt management plan is suggested as the way forward, a person should ask how soon after receipt of their monthly payment is it sent to the creditors? Any substantial delay may mean it’s in the agency's bank account earning interest.
Better Business Bureau
If still unsure about the legitimacy of a credit counseling agency, people can check with the Better Business Bureau (BBB) (http://www.bbb.org) to see what complaints have been filed against the company and what action has been taken to resolve the complaint. It’s a simple on-line process. The BBB also has a helpful range of financial literacy tips, including “How to choose a credit counseling agency.”
Sources:
The National Foundation for Credit Counseling (NFCC), http://www.nfcc.org accessed May 22, 2009
Better Business Bureau (BBS), http://www.bbs.org accessed May 22, 2009
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