8 Questions to Ask a Credit Counseling Agency

When you are trapped under the heavy weight of debt, credit counseling agencies can be a way to avoid bankruptcy and eliminate debt in a more efficient way than if you were to handle it all on your own. While any consumer has the power to negotiate balance payoffs, many would benefit from the additional services and guidance of a professional credit counselor.

Credit counseling agencies typically offer budgeting information, debt reduction tips, and lessons in better money management. Sadly, not all companies are operating on the up-and-up and consumers who do not research the agencies thoroughly can find themselves deeper in debt from incurred fees and without the proper tools to get rid of debt.

Before committing to a credit counselor, you should conduct a thorough screening of several agencies to decide which offers the services you need. Here are 8 questions you need to incorporate into an initial interview to help you weight the pros and cons of each company:

1. How experienced are the counselors?
Consumers need professional guidance and there are several fly-by-the-night individuals who promote themselves as such but have no proper training to help a debtor. Ask for credentials and check with your own state’s laws about what licensing may be required. Check also for affiliations with national organizations like the National Association of Certified Credit Counselors (NACCC), National Foundation for Credit Counseling (NFCC) or the National Institute for Financial Education of America (NIFE).

2. How much time is devoted to client consultation?
You want a counselor who is there when you need questions answered. Anyone presenting a high-pressured sales pitch but no extra time for guidance is not the right person to help. If during your initial consultation you feel rushed or spoken to in any condescending manner, thank the counselor for their time and move along.

3. How much are fees and how are they paid?
Some consumer credit counseling agencies offer their services for free but not all operate that way. Ask upfront for a written breakdown of services and total cost. A red flag for a bad company would be an insistence on retainer or enrollment fees. Be very clear on pricing so you’ll know exactly what to expect.

4. What debts are within the scope of counseling help?
There are some types of debts that a counseling agency can not help your resolve. Before you commit to getting help, ask what kind of debts can be handled and eliminated through the agency’s help. Be sure you know exactly what debts you owe and to whom so your consultation will be accurate from the start.

5. What are the additional services provided?
Eliminating debt is only half the battle. For those with financial problems, it is important to find help before, during, and after the debt elimination process. Ask if the agency offers debt management tools like budgeting course and find out if they have follow up programs for after care concerns.

6. How will the account be managed?
You’ll want to know how you can access your account information to better track your results. Some companies offer online services where you can log in to your account at any time and others only provide paper statements monthly. As a debtor, it is ultimately your responsibility to ensure your debts are handled properly and you must stay on top of how your account is being handled every step of the way.

7. How does the program work?
Be sure to get an outline of what the counseling agency will be doing for you and when. Ask if they will be handling collection calls and what you need to do to ensure the job is getting done. You’ll want to get an overview of what will happen and when so you can anticipate your own financial goals and ensure you can make payments on time.

8. What does the contract mean?
Before signing up with any agency, make sure you receive a copy of the contract or agreement you will be required to sign. Read the entire contract and make sure you ask any questions or address any concerns you have before executing your signature.