Debt Counselling Info

In addition to the information you find on this page, see the posts entitled Debt Counselling Scams and Recognizing the Signs of a Debt Counselling Scam for more information about avoiding possible scams.

If you’re going to seek outside help with the process of reducing your debt, you’re going to want to find a reputable counselor.  These professionals know the strategies that work or don’t work for specific financial situations.  And hopefully they have the experience necessary in handling these types of financial transactions.  Unless you already have one you trust in mind, the easiest place to begin is with a consumer debt counseling agency.

There are a number of things you should do and shouldn’t do while you are shopping around for an agency/counselor you are comfortable with.  Below is a short list we have accumulated from our internet research.  Following these guidelines should help make the process easier and help to avoid possible pitfalls.

Shop around

First of all, you should shop around for the right agency.  There is a little work involved with this but it will pay off in the long run.  Not all credit debt counseling agencies are the same.  Business philosophies and techniques differ from one agency to the next.  These things factor into how the counselor’s treat their clients and how well they do their jobs.  It may be tempting to save time and just end the search quickly by going with the first agency you find.  However, if you sign on with a company that is more interested in the money they can make from you than an obligation to good customer service, you may end up over paying for inexperience, untimely progress and lower quality results in terms of how much your debt can be reduced.

Don’t approach any company that isn’t a member of a network organization

Two of the largest debt relief network organizations are TASC, The Association of Settlement Companies and NFCC, the National Foundation of Credit Counseling. Agencies that belong to these organizations voluntarily comply with a strict set of industry guidelines designed to protect the consumer and the business.  If an agency doesn’t belong to one of these organizations or one like them, you could be leaving yourself open to become ensnared in some kind of scam.  It would be better to walk away and move on to the next company.  In our research it was recommended that the organizations themselves be contacted for a referral to one of their member companies.

Ask about the agency itself

One of the most important questions to ask is how long the company has been in business.  It is a good idea to avoid agencies that have just recently started up.  Not that a new company will give any less service, but the risk of running into a scam is greater.  Our research indicates that it is better to go with a company that has been established for many years than one that is still in its infancy. Another good piece of information is how much debt the company has settled – obviously, the more, the better.

Fees and Refund policies

Fees should be based on the amount of debt and/or the results.  If the company requires that large fees be paid up front, move on.  There will almost always be some minimal up front fees, but these should be just that – minimal.  A reputable debt counseling agency will have some kind of refund policy that is tied to the end results.  If they are unable to settle or reduce any of your debt, you should be entitled to a refund.  If the fees are strictly based on the amount of debt, they will likely refuse to make any kind of refund.  Our research indicates that some companies will make a 100% refund, while others will refund a percentage.

Commission or Salary

Ask the counselor how he/she is compensated.  The only good answer is wage or salary.  If they are getting paid on commission, the possibility of being steered in the direction of unnecessary and costly services becomes greater.  After all, they do want to make more money.

Get everything in writing

The number one, most important thing you can do is get everything in writing. In the debt counselling industry, there is no such thing as a gentlemen’s agreement.  Business is business and documentation is the only thing that will stand up should any kind of legal issues arise.

We hope you find this information helpful and that it gives you more confidence during your search for debt relief.  As stated above, please be sure to see the articles regarding Debt Counselling Scams and Recognizing the Signs of a Debt Counselling Scam for more information about the do’s and don’ts of locating an agency.