Credit Counseling Questions.
When you find yourself thinking about using a credit counseling service, you need to be very careful. You need someone who will help you, not just some pushy sales associate who wants only to sign you up for their service. The debt industry has grown dramatically as the American consumer has taken on an increasing load of debt. This increased competition for the debt dollar has attracted some charlatans to the industry. You need to be very careful you know with whom you are dealing. You are about to place your financial life in someone else''s hands. Make sure you have the answers to some questions before you do. Then make sure you like the answers to your questions. Here are some for starters:
- Is the counseling
agency affiliated with major industry groups? There are two
major debt industry groups, The National Foundation for Credit
Counseling and the Association of Independent Consumer Credit
Counseling Agencies. Affiliation with one of these is no
guarantee you have a good agency but these groups do have a set
of standards which need to be followed, so it is a start. Are
there large up front fees? The credit counseling agency will
usually charge a small fee to set up your account. They then
will charge a fee to administer your plan each month. If a large
fee is required to begin your plan, watch out. Some companies
have charged large up front fees and then disappeared with the
clients money. You need to be sure the money you are paying is
going to your debts and not being syphoned into the pocket of
your credit counselor. Can you really do that for me? Some
credit counseling agencies make unrealistic promises. If
statements made seem too good to be true, you need to pin them
down. Settling your debts for little money or without harming
your credit rating are not realistic. If they insist they can,
ask for the promises in writing. Chances are they will not be
willing to do this if they cannot deliver. If they do put it
into writing, at least then you will have something to use for
evidence if legal action becomes necessary. Which of my
creditors have you worked with in the past? You have a list of
your creditors. You want to compare it to the creditors they
have worked with in the past. Have they been successful working
with your creditors in reducing payments,lowering interest, and
eliminating fees? You need to know not all creditors will work
with credit counselors. If all, or most, of your creditors have,
or will, you should investigate these services further. If not,
credit counseling won''t do you much good. To protect yourself,
ask for a list (in writing) of any of your creditors they have
worked with in the past. Will my creditors be paid on time each
month? Two things come into play here. What are the due dates of
each creditor and when during the month do you get paid? Nothing
defeats the purpose faster than paying a creditor late, after
you have set up a new payment schedule. Some credit counseling
services use a set date each month to make payments from the
money you have given them. If they don''t have your creditors
change the due date you could be socked with late fees each
month. Find a service that adjusts the due dates of your bills
to work around the days you get paid. How do I pay you each
month? The credit counselor can''t pay your creditors until you
pay them each month. Will they remove money, each month, from
your account with an electronic transfer or are you required to
send them a guaranteed check or money order? You want to make it
as easy as possible for this plan to work. Look for a service
that will withdraw funds from your account automatically each
month. When and how often will I get statements of my accounts?
Just because you have turned over a portion of your financial
life to someone else to run, does not mean you don''t need to
keep track of what is going on. Your statements should break
down your payments so you can see where the money is going. How
much is going to interest, how much to the principal balances,
and how much is being paid to the credit counseling service. Who
can I call? When you have a problem or question can you speak
with someone on the phone? Are you able to speak to the same
counselor each time? If not, how long does it take to return
phone calls? Do this up front. Make sure you can live with the
answers you receive. Then test the service to see if they live
up to what they have said. Check their service out before you
sign on the bottom line. If you find that you can''t get
questions answered or telephone calls returned look for another
service. Going through credit counseling is stressful enough
without any added problems. These questions will give you a good
idea what kind of service you have found. There are other
questions you may ask. If you think of any do not hesitate to
ask and don''t stop asking until you get the answers you need.
It is your money.
About the author: David Wilding has for the past ten year worked with groups and individuals to rid themselves of debt. Visit his website http://www.debtattack.com for ideas, tools, and strategies to live debt free.
Author: David Wilding