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5 Tips For Selecting a GOOD Credit Counselor

By Paula Langguth Ryan

Most of what credit counselors do you can do for yourself. But, if you're too emotionally involved with your money situation to create and stick with a plan and negotiate with your creditors then using a credit counselor may be a good option for you!

Credit or budget counselors, including those who are listed as being with the Consumer Credit Counseling Service (CCCS) or the Genus/National Credit Counseling Service (NCCS) are non-profit organizations that offer free budget counseling and (for a small fee which is often rolled into your monthly payments), debt repayment plans.

With a credit or budget counselor, you set up a workable budget and send one lump sum payment to the credit counseling service so they can divide the money up among your creditors. Your budget may seem tight at first, but you will find that you could be completely debt free within 3 years if you stick to the repayment plan!

Most credit and budget counselors work with your creditors to get them to accept smaller payments from you, and attempt to freeze or lower interest rates and late payment or over-the-limit fees. In addition, once you've entered into a repayment plan with the counselor, the harassing phone calls from creditors will stop. Even if you choose to set up your own repayment plan, instead of going through the credit counselor, you can get free budget assistance from them!

If you do decide to us the credit counselor's debt repayment program, be sure to ask these questions before you sign up:

1. Which of my creditors have worked with you in the past to reduce payments, or freeze or lower interest and fees? Before you sign up for a repayment plan, make sure that the counseling service can help you reduce interest and fees for your creditors. Not all creditors are willing to negotiate with credit counselors. If most or all of your creditors are willing to negotiate, then it may be in your best interest to start a repayment plan. If most of your creditors won't work with the credit counselor, then a repayment plan won't work for you. To be on the safe side, ask the credit counselor for a list of the creditors that have worked with them or have them put in writing which of your creditors they have successfully negotiated with in the past.

2. When will my creditors be paid? Some counseling services have a set date each month when they take money out and apply it to your debts. Sometimes, creditors wind up being paid after their due dates. Make sure that the counseling service will work with your creditors to change the due dates or will set up your payment schedule based on when you get paid. The best services will work around your payday and your bills' due dates.

3. Can you take money electronically out of my checking account or will I have to send you a certified check or money order each month? You're much more likely to stick with a repayment plan if making that single payment to the counseling service is a "no-brainer." If you're pressed for time and don't think you can get to your bank each month to get a certified check, make sure the counseling service will take money out of your account electronically.

4. How often can I see statements of my accounts? Your counselor should send you at least monthly reports on your progress. The statements should show you how much of your payment is going toward interest, how much toward the minimum payment and how much toward the counselor for his/her services.

5. Will I always deal with the same counselor, or at least get a live person on the phone when I call during regular business hours? How long does it take for you to return phone calls? Make sure you're comfortable with the answers you get here, and that you're comfortable with the people you might be dealing with. After your free budget counseling session, call your counselor once or twice with questions you have about the budget paperwork to make sure that you don't have a problem getting your questions answered and your phone calls returned.

There's no obligation or payment due to any good credit counselor until after you've determined what your monthly payment would be under the plan and you've decided to join their program. I encourage you to explore all your options and then pick the one that makes you feel most comfortable.

Paula Langguth Ryan is the author of "Bounce Back From Bankruptcy" and "Giving Thanks: The Art of Tithing"  and a former credit counselor, financial editor and ghostwriter for national finance magazines. Visit her site at for a free monthly Art of Abundance e-zine or mailto:paularyan- for a free e- book of Giving Thanks.

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