There are serious credit counseling agencies that rescue people from the deepest financial holes. There are some of such agencies that just shovel in more dirt. How do you tell them apart?
How to Recognized A Reliable Credit Counseling Agency
Member Of The Better Business Bureau
A good and serious Credit counseling agency should have a BBB logo and a link to their record on the Better Business Bureau website on on the website of the agency.
Accreditation
Reputable credit card counseling debt services will be accredited by an independent nonprofit, just as many schools are. One such accreditation body is the National Institute for Financial Counseling Education.
Fees
The fees charged by a good counseling agency is usually around $30. A few of them also charge a fee upfront, though this fee should be reasonable (around $50 tops). It may be possible to get a hardship waiver of these fees if you truly do not have the $30-50.
Clear Application
The application must clearly indicate what the fees to be paid are, what the services to be offered, and in what timeframe all of this will be provided.
Reasonable Promises
Stay away from any organization that proposes to “wipe out” your debt for you, rather than simply helping you to repay the debt. Short of your creditors just deciding to forget about the debt (unlikely), there is no way to eliminate debt–even bankruptcy leaves a huge mark on your credit report for ten years.
True, your car may not go missing from your driveway if you stop paying unsecured debt (i.e., debt that is not “secured” with collateral, like most credit cards, unlike most auto loans). But you are still legally obligated to pay the debt, and the possibility of being taken to court will loom over you. You will likely be unable to get even “bad credit” financing if you still have debts in collections–good luck buying a car or house.
Not Necessarily Signs of a Reliable Agency
Nonprofit Status
Nonprofit status is not a government endorsement of a group’s mission but rather essentially a tax designation. There are many of near-fraudulent credit counseling agencies that are registered nonprofits.
Respectable Name
Any group can put words like “Alliance,”"National,” “Assistance,” and other trust-inspiring words in their name. But ,remember,a name is just a name. You have to make sure to check any organization against the list above to make sure they’re reliable. Also search for the group’s name on a search engine. Don’t just look for a lack of negative reports–that might just mean the group changed names recently. Instead, look for positive reviews from real people, and preferably mention on reputable third-party websites, such as news sites.
Ready to find a credit counseling agency then just use the checklist above, and you’ll have no trouble separating the saints from the scams.
