How to choose a credit counselor
Credit counseling is a topic of growing concern for many people as they start to dig themselves out of debt. How can we stay safe and choose a service that will actually help?
Q:
After years of struggling with debt, we finally decided to pull the trigger and speak to a credit counselor. We’re concerned about all the scam reports that we’ve heard about them, though. How can I have confidence that we’ll pick someone legitimate — someone who really will help us get back on the path to financial security?
A:
Getting credit counseling is a good decision. You can learn essential strategies for managing debt, explore your options for repaying existing loans, and receive confidential advice that’s custom to your financial situation. Even better, showing proof that you’ve been to credit counseling can help a lender overlook a complicated credit history.
If you’re already underwater financially and considering filing for bankruptcy, U.S. Code requires you to first meet with a credit counselor to learn all your options. Then, if things aren’t that bad, but you’re a bit behind, a counselor can work with you to establish a repayment plan, lower your bills and stop harassing calls from creditors. Finding a good credit counselor can be like finding a life raft when you’re stranded in the ocean.
Credit counselor or credit scammer?
Picking a credit counselor, though, is a hard decision. There are many options, but some people masquerade as credit counselors who are crooks seeking to steal your money or identity. So let’s take a look at a few ways to help sort out the legitimate counselors.
Remember, just because an organization calls itself “not-for-profit,” that doesn’t mean it provides services for free. Always ask about fees or “contributions” upfront. If the credit counselor is defensive or evasive, leave and find someone else. Legitimate counselors may charge as much as $50 for an initial consultation depending on your financial situation. And a monthly fee of around $25 for representation with debt collectors.
Advertising
Be wary of counseling organizations advertising themselves. Legitimate credit counselors get referrals from lenders, lawyers, and charitable organizations. An organization that advertises on television or radio may lack the legitimacy of that network of referrals.
Look for a wide range of services. Good credit counseling organizations will offer more than just debt financing packages. They will also offer consumer education, budget assistance, and other educational opportunities. If your credit counselor is pressuring you to sign up for a debt management plan without first reviewing your finances, you should find another counselor.
Approved Counseling
Check the United States Trustee Program list of approved credit counseling agencies. This website allows you to find a credit counselor approved by the Department of Justice for bankruptcy proceedings. In addition to searching by state, you can also find agencies that work in languages other than English. The Department of Justice has vetted these agencies, and most major lenders acknowledge their legitimacy.
Call the National Foundation for Credit Counseling at 1-800-388-2227. The NFCC is a nonprofit educational organization that seeks to improve financial literacy across the country. They’re funded by a coalition of creditors and charitable organizations, certifying their members in financial education and ethical business practices. In many cases, an NFCC member can provide services at low or no cost.
If you’re concerned about your financial future, speak to a representative from Elevate Credit Union today. The knowledgeable, professional staff can help you find the path to financial security. Whether you’re interested in help with debt, mortgages, or budget counseling, Elevate Credit Union can help you get on your own two feet again. So call or stop by Elevate Credit Union today!
