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When to Use Credit Debt Counseling Services

Credit debt counseling services can be helpful to those who are struggling with debt. Almost everyone will deal with financial hardships at some point in their lives. How do you know when it’s the right time to call for outside help? We’ll explain the situations in which it makes sense to call a nonprofit credit counseling agency and how they can help you!

credit debt counselingWhat can credit debt counseling services do for you?

A nonprofit credit counseling agency may offer a multitude of counseling services. These may include credit counseling, bankruptcy counseling, reverse mortgage counseling, and student loan counseling. Depending on your situation, they may enroll you in a debt management program. A debt management program allows clients to combine their multiple debts into one monthly payment. Rather than paying each creditor individually, you simply pay the credit counseling agency. From there, they disburse the money to your different creditors. Additionally, another advantage is that your payments will be lower than they would be otherwise. Although you still pay off the principal amount you owe, the agency negotiates waived fees and lower interest rates with the creditors. As part of the credit debt counseling services, you also will be given a plethora of free financial education materials!

When should you seek help?

If you’re having trouble keeping up with your credit card bills, student loan payments, and other expenses, it’s probably time to seek help. Don’t wait until your situation gets worse. Keep in mind that most of these agencies can typically help with unsecured debt, not secured debt. You may want to seek assistance elsewhere if, for example, your main financial issue is your auto loan.

Before you call for credit debt counseling services, you should have a few pieces of financial information handy. Prior to making the call, here’s a list of things that you should gather. Your most recent pay stubs, credit card statements, and having the account numbers/balances will be beneficial to have readily available. Also, a list of your monthly and periodic expenses such as rent, mortgage, groceries, utilities and car expenses is good to have. The credit counseling session will likely take around an hour, so make sure you block out enough time for it.

What should you look for in reputable credit debt counseling services?

Here are some key indicators of a reputable credit counseling agency to look for before signing up:

  • Be sure the agency is charging you reasonable fees (not more than $50/month for a debt management plan), but this can vary by State. ACCC firmly believes in keeping its set up fees as well as monthly maintenance fees as low as possible.
  • The credit counseling agency should be non-profit.
  • The agency should have been in business for at least seven to ten years.
  • The counselors at the credit counseling agency should be certified by an independent organization.
  • The agency should be accredited by the International Standards Organization (ISO) or by the Council on Accreditation (COA).
  • The agency should be a member of one of the trade associations: either Financial Counseling Association of America (FCAA) or the National Foundation for Credit Counseling (NFCC).
  • Consumers should consider checking with the Better Business Bureau for any consumer complaints made against the agency.
  • The agency you are considering should be licensed and bonded to do business in your state.
  • The agency’s willingness to waive the fees if you simply can’t afford them.
  • The agency should spend a reasonable amount of time for your consultation/budgeting session. At least an hour is needed.
  • The agency should provide you with a written budget based on your personal financial situation.

One of the most important points is to be sure that the agency offers free education to help you learn how to manage your finances. They should also provide you free ongoing education while on the debt management program or even if you decided a DMP program is not right for you. The agency should be able to provide you some financial learning resources.

If an agency is not willing to answer your questions or you feel that the answers are not satisfactory, call someone else. You want to choose an agency that is reputable and willing to help you.

If you’re struggling to pay off debt, ACCC can help. Call 800-769-3571 to speak to one of our certified credit counselors today!

ABOUT AUTHOR / Madison

Madison is a Marketing Communications & Programs Associate at ACCC. She is excited to share her tips on saving money and being financially responsible here on the Talking Cents blog!

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