Setting Things Straight with Your Credit Counselor

Setting Things Straight with Your Credit Counselor

The Federal Trade Commission offers a wealth of information for consumers who are going through financial problems. In the article entitled, “Fiscal Fitness: Choosing a Credit Counselor”, the FTC reminds consumers that while many credit counseling organizations are considered “nonprofit”, it doesn’t necessarily mean that their services are free or affordable. Furthermore, some nonprofit credit counseling entities even charge hidden fees or convince consumers to fork up “voluntary” contributions that can even increase debt.

The FTC reminds consumers to be very careful in choosing a credit counselor, and published a list of questions that individuals should ask before signing up:

What services do your offer?

The FTC advices consumers to steer clear from organizations that only offer a debt management plan (DMP) as your sole option. Instead, find a credit counselor that provides “a range of services, including budget counseling, and savings and debt management classes.

Do you offer free information?

Educational materials should be free of charge. Beware of organizations that charge for information.

What are your fees?

Get a quote prior to signing up, and make sure you have it in writing.

Will I have a formal written agreement or contract with you? – This should go without saying, but be sure to read the whole contract before signing anything. If they have made verbal agreements with you, be sure to have those promises in writing as well.

What are the qualifications of your counselors?

Be sure to get information on the educational and training background of the credit counselors whom you’ll be working with. According to the FTC, “try to use an organization whose counselors are trained by a non-affiliated party.

How are your employees compensated?

That FTC states that you should consider it a red flag if employees are paid more if you sign up for certain services, pay extra fees, or make contributions to their organization.

For the full list of questions as well as more information on credit counselors, visit the official website of the Federal Trade Commission.