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
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- firstname.lastname@example.org
for a free e- book of Giving Thanks.