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How to select a good credit counselor

Published by admin on January 10, 2010

How to select a good credit counselor

Federal and state regulators are giving some warnings to consumers that some credit counseling agencies are not what they seem. You can actually use a non-profit status, to avoid consumer protection laws. This gives them the opportunity to you advantage, consumer confidence.

What makes a non-profit agency? All they need to do is to provide free education and counseling services. But many are using these agencies as a way to hustle customers in debt management plans, which pay big time.

Most debt management plans, client pays the agency a certain amount of money each month. The Agency’s accounts and then paid. Agency is going to negotiate lower interest rates and termination fees with the customer credit card and loan companies. Credit card companies will tip the agency, the percentage of the amount recovered.

Many experts say that’s often the pressure in the plans, even if they do not need. Some agencies do not pay invoices on time, and you are the one who suffers.

IRS has also stiffened inspection agencies seeking non-profit status.

There are legitimate credit rating agencies, consultants out there who can help you with your financial problems. You have to shop around and do your homework in selecting the agency.

Talk and visit several agencies before choosing one. Do not let that fool you-for-profit environment into thinking that some agencies is better than the other. Non-profit status does not distinguish well from bad; you have to do that yourself.

Watch out for agencies that want to “voluntary” contributions and high monthly service charges. If you have financial problems, it’s likely that you can not afford to pay high fees. Before you sign up for a debt management plan, require a written declaration of all agency fees.

If the agency says it can come out of debt quickly or slash all your interest rates can not believe it. You are only looking for a plan that will get you there a little faster – but it still takes time.

Second, the interest rate set by your credit card company, not the agency. Many creditors will not lower rates. Some will. The Agency has no idea to know what the future holds.

Talk to your creditors to make sure that they are willing to work with an agency you have chosen. When you start a payment plan, make sure that your creditors receive payment for their time. If not, this is your problem.

Ask around for a reputable agency. Check with Better Business Bureau and your state attorney generals’ office to see if there are any complaints on file. Ask the agency if they are members of an association of independent credit counseling agencies or the National Foundation for Credit Counseling – two well-known groups that have standards and fee limitations.

Is right to ask for help, but make sure you can trust who you ask.

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