Questions to Ask a Credit Counseling Service Before You Sign Up

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 have some answers before you begin dealing with an agency. You are about to place your financial life in someone else's hands. Make sure you like, or at least can live with, 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 toward 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?