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Should you get credit counseling?

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Kevin Stringer
Answered 2015-07-17 17:30:21

If you are living paycheck to paycheck, worried about debt collectors, or can't seem to develop a workable budget, you may be considering a consumer credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable credit counseling service. Choosing whether or not to use one of these services and choosing which agency to work with can be difficult, so here are some tips on how to approach this decision.

If you want to work with a credit counseling agency, interview several. Here are some good questions to ask:

  • What services do you offer?
  • Do you have educational materials? If so, will you send them to me? Are they free?
  • Can I access them on the internet?
  • In addition to helping me solve my immediate problem, will you help me develop a plan for avoiding problems in the future?
  • What are your fees? Do I have to pay anything before you can help me? Are there monthly fees? What's the basis for the fees?
  • What is the source of your funding?
  • Will I have a formal written agreement or contract with you?
  • How soon can you take my case?
  • Who regulates, oversees and/or licenses your agency? Is your agency audited?
  • Will I work with one counselor or several?
  • What are the qualifications of your counselors? Are they accredited or certified? If not, how are they trained?
  • What assurance do I have that information about me (including my address and phone number) will be kept confidential?
  • How much do I have to owe to use your services?
  • How do you determine the amount of my payment? What happens if this is more than I can afford?
  • How does your debt repayment plan work? How will I know my creditors have received payments? Is client money put in a separate account from operating funds? How often can I get status reports on my accounts? Can I get access to my accounts online or by phone?
  • Can you get my creditors to lower or eliminate interest and finance charges or waive late fees?
  • Is a debt repayment plan my only option?
  • What if I can't maintain the agreed-upon plan?
  • What debts will be excluded from the debt repayment plan?
  • Will you help me plan for payment of these debts?
  • Who will help me if I have problems with my accounts or creditors?
  • How secure is the information I provide to you?

You might wish to check with your state Attorney General, local consumer protection agency, and the Better Business Bureau to find out if consumers have filed complaints about the provider you are considering. Any reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If not, consider that a red flag and go elsewhere for help.

Be careful before choosing Consumer Credit Counseling. Research this option using the internet and verify everything. CCC companies have gotten a very bad name in recent years based on changes in their industry. Credit counseling was originally started by the credit card companies themselves as an alternative means for collecting their debt from consumers. These companies typically never reduce the amount owed to their participants, sometimes renegotiating late fees and over-the-limit charges. This is the "savings" that they advertise. According to NationalDebtRelief, "the success rate of debt management plans is about 20% to 26%." They also go on to recommend considering debt consolidation loans and Chapter 7 bankruptcies, citing their "better completion rates."

It is also important to note that when filing for bankruptcy, whether Chapter 7 or Chapter 13, that you are required to provide a certificate showing that you received credit counseling from an agency approved by the U.S. Trustee's office within the 180-day period before you file for bankruptcy.

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Related Questions

What are the benefits of consumer credit counseling?

The benefits of consumer credit counseling is that you will get some helpful advice on how to get your consumer credit back on track. There are many benefits that come with consumer credit counseling.

Do you have to get credit counseling before you can file for bankruptcy?

You do not have to necessarily get credit counseling before you can file for bankruptcy.

What services are provided by Consolidated Credit Counseling Services Inc?

Consolidated Credit Counseling Services, Inc. offers services such as reduction of credit card payments. Consolidated Credit Counseling Services, Inc. also offers services for debt management solutions and credit and housing counseling opportunities.

What kind of company is Careone Credit Counseling?

Careone Credit Counseling is a debt relief company that helps consumers get out of debt with the help of a trained credit counselor. They also provide credit counseling for those in need.

Where can one get credit card debt counseling services?

Credit card debt counseling services are available from a number of sources. Such sources include Debt Helper, Consumer Credit, and the National Foundation for Credit Counseling.

What companies specialize in consumer credit counseling?

American Consumer Credit Counseling, Horizon Credit Counseling, Christian Debt Counselors and Clear Point Financial Solutions are all consumer credit counseling. Each of these companies is also classified as a non-profit organization.

Where can one find a consumer credit counselor?

Some of the larger banks may offer you credit counseling if you have an account with them. If that is not an option for you; you should check out the National Foundation for Credit Counseling. They will be able to provide you with steps to take as well as a listing of reputable credit counselors in your area.

When was National Foundation for Credit Counseling created?

National Foundation for Credit Counseling was created in 1951-01.

Where can someone get consolidation credit counseling?

You can get consolidation credit counseling online at the ConsolidatedCredit Organization website. Alternatively, you can also get this type of counseling from websites such as ConsumerCredit.

What companies provide credit counseling?

Credit Counseling can be seen as it's own business and there are many place where credit counseling is their only job. Banks usually have options available for someone as well.

What companies offer non profit credit counseling?

The United States Department of Justice website has a list of approved Credit Counseling Agencies by state. Companies likely to offer non-profit credit counseling services include CareOne Debt Relief Services, AAA Fair Credit Foundation, Springboard, Money Management International, American Consumer Credit Counseling, American Financial Solutions, Take Charge America, ClearPoint Credit Counseling Solutions, InCharge Debt Solutions and Alliance Credit Counseling.

Where can I get free credit counseling in Detroit, MI?

Christian Credit Counseling offers free counseling that may help you. In Detroit, they can be reached at (248) 557-7341.

What companies offer credit counseling and debt consolidation services?

There are a couple of companies that offer credit counseling and debt consolidation services. Some of those companies include Car One and Credit Counseling.

Should I seek out the services of credit counseling to handle my bankruptcy?

Credit counseling can be useful to use before declaring bankruptcy. They can help you manage your debt, develop a realistic budget, and formulate a plan to negotiate payments.

Where can one get Christian Credit Counseling?

Christian Debt or Credit Counseling is provided by such companies as Christian Credit Counselors, Family Life Credit, Family Life Resources, and Christian Credit Counsel.

Where can one get some consumer credit counseling?

American Consumer Credit Counseling is a nonprofit credit counseling agency that helps consumers take control of their financial lives through credit counseling, debt consolidation, and financial education. Since 1991, we have been improving lives and providing solutions to people in need of financial help debtredemption.

What is the purpose of credit counseling?

The purpose of credit counseling is to let a person know ways to reduce their debt. They also counsel people in ways to stay out of debt. A person might need credit counseling if they are about to file for bankruptcy.

What type of services does the National Foundation for Credit Counseling provide to their clients?

The National Foundation for Credit Counseling provides credit counseling, housing counseling, bankruptcy counseling and education, and financial education to their clients. They also have tools available to help consumers learn to budget, tips on how to save and resources to teach kids how to save.

Is there a credit counseling program that won't ruin your credit score?

Their are several credit improvement programs available online for free. You dont have to report credit counseling services so it shouln't affect your credit score.

Are there many legit Credit Counseling services in Cleveland?

Credit counseling services are more than likely a scam in the majority of cases, which is unfortunate. In the Cleveland area, there are very few credit counseling services at all, but most of them are illegitimate.

What services does the Debt Management Credit Counseling Corp offer?

Debt Management Credit Counseling Corp offers a number of services including counseling programs, debt management plans, education programs, and credit score analysis.

Which companies specialize in bankruptcy credit counseling?

Learn about our pre-bankruptcy credit counseling and pre-discharge debtor education, both ... The pre-discharge debtor education course will require you to study a variety of ... We are available to support you: Monday-Thursday, 8am-8pm (CST), Friday, 9am-6pm (CST), excluding major holidays. affordabledebtconsolidation

Why should a person use the help of Consumer Credit Counseling Service CCCS?

CCCS agents can help you learn how to rebuild and reestablish your credit by first reviewing your spending and income and helping you to create a budget that fits your goals. Then, if appropriate, they can help you create a debt management plan (DMP) to tackle your unsecured credit card debts debtredemption.

Does credit counseling damage your credit for a long period of time?

Less than if you stay in a default or bankruptcy situation. Credit counseling teaches debtors how to effectively manage their debt. I've only personally seen credit counseling improve a person's credit. Financial education is key to moving forward.

What services does Hummingbird Credit Counseling offer?

Hummingbird Credit Counseling offers bankruptcy certifications, non- bankruptcy financial counseling, learning center and resources, and attorneys and consumer organizations.