Finding Creditable Credit-Card Counseling
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Some nine million Americans turn to credit counselors each year for help in whittling down the mountain of debt they have amassed. At any one time, two million are enrolled in active credit-repair programs.
But not every counselor is there to help. Some self-styled “experts” only compound your problems, offering improper advice, engaging in deceptive practices, or charging exorbitant fees. In fact, in March 2005 the Federal Trade Commission accused three consumer debt-services companies of cheating financially strapped clients out of some $100 million. Those companies—National Consumer Council, Inc. (in
So how do you identify a creditable credit counselor? The steps below
Don’t get suckered by status. Nearly every agency in the business claims it has nonprofit, tax-exempt status. That doesn’t mean a counseling firm won’t charge you high fees, says the Consumer Federation of America (CFA), which did a pioneering study of the practices of credit counselors in 2003. Avoid any agency, says the CFA, that charges more than $50 in “set-up” charges for credit
counseling. Likewise shun any outfit charging monthly fees above $25. The CFA also warns against using a counselor who works on commission—agencies may not reveal this fact—or any agency that claims to offer “voluntary” or sliding-scale payment; the likelihood is high it will later pressure you to pay “full price.” All terms should be written out in your initial consultations.
Demand accreditation. The National Foundation for Credit Counseling is the largest and most respected network of credit counselors. The foundation requires its member businesses to undergo an accreditation process performed by a third-party organization such as the Council on Accreditation.
Many NFCC members operate under the name Consumer Credit Counseling Services (CCCS). For accredited counselors in your area, contact the NFCC at
Expect a careful review. Count on receiving individualized counseling. Any agency that takes less than 30 minutes to interview you or review your finances before developing a debt consolidation plan is not reliably deliberate; take your
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