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Legitimate Consumer Credit Counseling Services (CCCS)
employ certified counselors trained in the area of
consumer credit and will review your entire financial
situation and come up with a personalized debt
management and budgeting plan to help resolve your
financial difficulties. They will then contact your
creditors and negotiate a lower temporary interest rate
and a scheduled payment plan. Upon setting up an agreed
amount you can apply to your bills, you will send your
payments to the (CCCS) who will in turn disburse the
monies to the creditors. You are required to make
regular, timely payments, and could take up to 48 months
or longer to completely pay off your debts.
Choosing a Credit Counseling Agency
Credit counselors should be
certified and trained in the areas of consumer
credit, money and debt management, and
budgeting, and should discuss your entire
financial situation with you, and help you
develop a personalized plan to solve your money
problems without pushing a debt management
program. An initial counseling session typically
lasts an hour, with an offer of follow-up
sessions.
A reputable credit counseling agency should
also provide you with free information about
itself and the services it provides, without
requiring you to provide any details about your
situation. Once you’ve developed a list of
potential counseling agencies, check them out
with the Better Business Bureau to see if they
have a satisfactory record, how many complaints
(if any) have been filed again the credit
counseling agency, and for what reasons. The
United States Trustee Program also keeps a list
of credit counseling agencies that have been
approved to provide pre-bankruptcy counseling.
Questions to Ask a Credit Counseling Agency
Here are some questions to ask to help you find
the best credit counseling agency for you.
- What services do you offer? -
Look for a credit counseling agency that
offers a variety of related services,
including budget counseling, and savings and
debt management classes. Avoid agencies that
push a debt management plan (DMP) as your
only option before they spend a significant
amount of time analyzing your financial
situation.
- What educational
materials/information do you offer? Is it
free? Avoid credit counseling agencies
that charge for educational materials or
other written information.
- What are your fees? Are there set-up
and/or monthly fees, how are they broken
down? Get a specific price quote in
writing and make sure you understand exactly
what fees you'll be charged, and what
services you'll receive for each fee.
- What if I can’t afford to pay your
fees or make contributions? Under the
terms of the Pension Protection Act of 2006,
non-profit credit counseling agencies must
provide services for free if a consumer is
unable to pay. If a for-profit credit
counseling agency is unwilling to work with
you, look for a non-profit agency.
- Will I have a formal written
agreement or contract with you? Make
sure you get a written agreement which sets
for any promises that have been made, and
the fees you will be charged. Don’t sign
anything without reading it first.
- Are you licensed to offer your
services in my state? Many states
require credit counseling agencies to be
licensed in each state, so make sure any
agency you do business with is licensed (if
necessary) and is able to do business in
your state.
- What are the qualifications of your
counselors? Are they accredited or certified
by an outside organization? If so, by whom?
If not, how are they trained? Try to use
an organization whose counselors are trained
by a non-affiliated party and who have a
background in debt management, consumer
credit and budgeting/finance.
- Do your employees work on commission?
If employees earn a commission for signing
you up for certain services, making a
contribution, or enrolling you in a debt
management plan, you should steer clear.
Debt Management Plans
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Some credit
counseling services offer a debt
management system. What is it? Instead
of having to keep up with all of the
payments yourself, you will have the
option of submitting one lump sum
payment to the credit counseling service
and they will do it for you. One note of
caution here: there have been instances
of a credit counseling services missing
their client’s payments, and if that
happens, your credit report will suffer
for it. Knowing that, be sure to check
out the company thoroughly before
signing up for their debt management
program. |
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