How Do Credit Counseling Agencies Work?

hi! i;m just new here in these forums, and i'm looking for a debt relief option that can help me. i have around $30000 in credit card and other debts. i'm tyring to look at other options. if all else fails i just might file for bankruptcy. now, my question is, is credit counsling a good bet for me? how do they work anyhow? thanks and have a good one

Credit counseling agencies aid to help consumers with creating a workable budget, setting up a payment plan with lenders, and keep track of all their bills. As you apply for a counseling session with a certified counselor, they will regularly meet with you and help create the financial plan that meets your needs. If it would be necessary for them to set up a debt management program, they may also do so--but again, I would like to stress that they will only do so if the debtor's situation calls for it.

The more reputable and legitimate ones offer advice and allow you to be connected with their certified counselors. Most of the time they say they're non-profit agencies, and typically they'll give you free instructional material to help you with your financial situation. They'll also give you free info about themselves and the services that they offer.

When you're looking for a debt counseling agency that can help you, it's best to check them out with the BBB and your state's Attorney General. It's also a good thing for you to be on the lookout for any customer complaints.

Barbie Girl, here are some factors you'd like to consider regarding your potential credit counselor, in the event that you're scouting for information:

1. The services that they offer. It's always a safe bet when the company has a range of services to offer. Most of the time credit counseling companies offer budget counseling, debt management seminars, and how-to classes. Having a company that also offers free information is also a very good deal. You also need to ask them if they can also help you create a plan to prevent these from occurring in the future.
2. The fees you need to pay them. Get a specific price quote in writing if they have set-up fees, monthly fees, and the like. Before signing your agreement, make sure that the payments you'll be setting up with them are payments you can afford! If a company won't be willing to extend their help to you in the event that you would not be able to pay, look for other options.

Of course, you also need to ask a formal written agreement or contract from them. It's of utmost importance for them to provide you with these documents.

you also need to check if they are authorized to operate in your state. i might be wrong but some states do not allow certain companies to conduct business in their areas, so better be careful.

personally a consumer's privacy is of utmost importance, too, given the many cases of id theft getting more and more rampant. so i'd suggest that you also check out their privacy policy. you need to get an assurance that all information you share with them--including your personal info--will be kept confidential and secure. read the company's privacy policy carefully. else that would lead to potential trouble.

One issue I notice that hasn't been addressed is the bankruptcy. I wouldn't go for bankruptcy if I were you. Bankruptcy can have a huge negative impact on your credit report. Not only will you lose all your assets, the notation will also stay on your credit report for ten years, and on your public record for twenty years.

Do you have a steady source of income, Barbie Girl? You can also opt for debt settlement. It helps for you to pay less than the full balance, and its effects on your credit report won't be as drastic.

If you're not really comfortable discussing the information here on the public forum. you may fill out a form on DestroyDebt.com and you can be connected with a qualified provider.

Do a little background research on your credit counselor, too. Check their qualifications. are they accredited and certified by reputable third-party organizatrons? Find out how they're compensated. Like if they receive commissions and such, or if they're paid more if you sign up for this service or that? That's sounds pretty shady if you ask me.

Actually caffeinatrix,

Credit counseling agencies can practice in all 50 states. However, some states require the credit counseling agency to operate as a non-profit organization.

Barbie Girl, what are your interes rates on yoru credit cards? Essentially, a credit counseling agency would set you up on a debt management plan, that typically lasts 5 years. You make one monthly payment to the agency, who in turn disperses the funds to each of your creditors. In the meantime, the agency attempts to negotiate lower interest rates with your creditors so you can pay off your debts within that time frame.

If your interes rates are already low then credit counseling may not be suitable for you. You may want to consider debt settlement as a bankruptcy alternative. Also, are you current on your monthly payments? If you are struggling to make the minimum payments or paying just enough to cover the interest, settlement would definitely be the preferred approach.

If you aren't comfortable sharing you situation through the forum feel free to fill out a form on DestroyDebt.Com for a free consultation!

I am sorry for the double post, but to clarify what I meant when stating "credit counseling agencies can practice in all 50 states."

What I meant specifically is that credit counseling is not outlawed in any of the states in the US. However, some states require you to be licensed there, and others require a non-profit status. Sorry for any confusion.

So in the states that the credit counseling agencies must be non-profit to operate in, are they allowed to charge that monthly fee? I have been talking to multiple companies and it seems like they all do?