Should you get credit counseling?

Answer

If you are living paycheck to paycheck, worried about debt collectors, or can't seem to develop a workable budget, you may be considering the a consumer credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable credit counseling service.

Here are some ideas on how to choose a credit counseling service.

If you want to work with a credit counseling agency, interview several. Here are some questions to ask. You might wish to check with your state Attorney General, local consumer protection agency and the Better Business Bureau to find out if consumers have filed complaints about the provider you are considering. Any reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If not, consider that a red flag and go elsewhere for help.

What services do you offer?

Do you have educational materials? If so, will you send them to me? Are they free?

Can I access them on the Internet?

In addition to helping me solve my immediate problem, will you help me develop a plan for avoiding problems in the future?

What are your fees? Do I have to pay anything before you can help me? Are there monthly fees? What's the basis for the fees?

What is the source of your funding?

Will I have a formal written agreement or contract with you?

How soon can you take my case?

Who regulates, oversees and/or licenses your agency? Is your agency audited?

Will I work with one counselor or several?

What are the qualifications of your counselors? Are they accredited or certified? If not, how are they trained?

What assurance do I have that information about me (including my address and phone number) will be kept confidential?

How much do I have to owe to use your services?

How do you determine the amount of my payment? What happens if this is more than I can afford?

How does your debt repayment plan work? How will I know my creditors have received payments? Is client money put in a separate account from operating funds? How often can I get status reports on my accounts? Can I get access to my accounts online or by phone?

Can you get my creditors to lower or eliminate interest and finance charges or waive late fees?

Is a debt repayment plan my only option?

What if I can't maintain the agreed-upon plan?

What debts will be excluded from the debt repayment plan?

Will you help me plan for payment of these debts?

Who will help me if I have problems with my accounts or creditors?

How secure is the information I provide to you?

Answer

Be VERY careful who you choose. I have been paying for 4yrs 5 months thinking as they stated that my bills would be paid in 5 years. Surprise they have NOT even paid 1/2 of what I owe after 4.5 years. Now have another 5 years to go. Maybe better solution.

Answer

Be VERY careful before choosing Consumer Credit Counseling. Research this option using the internet and verify everything. CCC companies have gotten a very bad name in recent years based on changes in their industry. CCC was started by the credit card companies themselves as another alternative to collect their debt from consumers. These companies typically never reduce the amount owed to their participants, sometimes renegotiating late fees and over-the-limit charges. This is "savings" they advertise. There is a huge failure rate of consumers who participate in CCC, well over 65%. Data gathered from the internet relates that if you can not tolerate slightly higher payments than you have presently, 3-5%, for a sustained (years) period of time, then you are not likely to successfully complete CCC. Another issue to look into before committing is what kind of accounts are included in CCC. Originating from the credit card industry, Consumer Credit Counseling only works with unsecured debt, like some credit cards. They never include secured debt, like your mortgage or car loan. And there are some credit card companies who now refuse to be included in their programs. To repeat: BE CAREFUL!

Answer

Under the new bankrupcy reform laws that go into effect in October 2005, credit counseling will become mandatory before filing for bankruptcy. No individual may be a debtor under the Bankruptcy Cpde unless they have, within 180 days prior to filing, received credit counseling from an "approved nonprofit budget and credit counseling agency", either in an individual or group briefing. Said counseling agencies are to be approved by the U.S. Trustee. (There are exceptions where there is an emergency and the person could not receive counseling within five days, or where the U.S. Trustee has determined that the approved agencies are not adequate to provide the required counseling.) If a debt management plan is developed it must be filed with the court.

The court may not grant a Chapter 13 discharge unless the debtor has completed an education course in personal financial management as approved by the U.S. Trustee. A debtor can be denied discharge if the debtor fails to complete the course.

The moral of this story is that when looking for a credit counseling company, choose one approved by your local bankrupty trustee so that you can meet the eligibiltiy requirements for bankruptcy if you eventually need to file for bankruptcy.

Answer

Unfortunately we learned the hard way that banks look very unfavorably upon credit counseling when you apply for a home loan. One lender told us that credit counseling is worse than bankruptcy. So...if you are wanting to buy a house in the near future, don't do it.

First answer by anonymous. Last edit by ID1126787501. Question popularity: 242 [recommend question]