Debt Counseling Services, Make Them Count to a Financial Rebound

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Debt counseling services can be of help if the right one is chosen. Make sure you choose one with sessions that offer solutions that will help solve the particular financial problem you are having. The solutions should be customized to your needs.

As mentioned before, check the Better Business Bureau and your state's Attorney General to see if there's no pending complaints against the company. Many debt counseling services are legitimate and will put you on the right track. Just make sure you pick the right one.

In choosing the best agency that offers sessions, here are some questions to ask before signing on the dotted line.

• Is the organization accredited by an independent third party? You don't want one who is only accredited by itself to make sure there are suitable checks and balances.
• Is the company a 501(c)(3) nonprofit community organization? This does not mean the agency is a legal entity but it does give a sense that it is on track.
• Who are the members of the Board of Directors? They should not be paid by the organization. Neither should they be members of the same family or their friends.
• What are the debt counseling services offered by the agency? Offering a wide-range of services is a good sign. There should be budget counseling for those who owe money; debt counseling for those who need help to get out of debt, counseling on housing for renting or buying.
• What are the fees for their work? The organization should be honest about fees and should not charge before the service is rendered. Set-up fee and monthly fee should be reasonable like in the $50 range. Some even recommend a $20 fee.
• How does the agency handle its counseling? Is it person-to-person, by phone or through the internet?
• Is the organization recognized by a national body such as the National Foundation for Credit Counseling (NFCC)?
• Does the organization provide free educational classes with tools available in the internet?
• Will the company work with all of your creditors?
• Will the agency work with you regardless of the amount of debt? Legitimate ones will do so no matter how large or small the debt is.
• What are the options offered for debt relief? Debt Management Plan (DMP) should not be the only one offered as each situation is different.
• Are the counselors paid for writing DMPs?
• If you elect to go on a Debt Management Plan, when will your monthly payment go to your creditors?
• Will the full amount of your payment go to your creditors? It should and not have a part of it go to the company.
• What is the length of the counseling session? It should at least be an hour long.
• Ask if your first payment will go directly to your creditors and not to the counselor.
• Ask if your deposits will be protected and how. Ask for a written proof that the organization is bonded or insured to protect you and other consumers.

If the debt counseling services include budgeting assistance, then again it should be personalized. They will ask questions as to income, expenses and the amount of debt. All of these have to be discussed in detail, including a credit report and the statements from the creditors. Nothing should be left out at this stage or the end result will not work.

At the end of the session, the debt counseling services should put two options on the table. One option will be the budget and action plan if the debt is paid through the agency. And the other will be the option if you decide to pay the debt yourself.

Here's a video on applying the common sense method to be debt free. Most counseling services will recommend to do this and it's a funny video.

Here are some suggestions to avoid making the financial situation worse when dealing with debt counseling services:

Use an agency that is a member of the National Foundation of Credit Counseling (NFCC) because this is a 50-year-old organization that has strict accreditation guidelines.

Avoid any agency that advertises on TV, calls you on the phone and sends you spams in your email inbox.

Don't believe any agencies that say they are "non-profit." This is not an important designation.

Visit http://www.debtadvice.org to find an NFCC affiliate near where you live.

Don't accept any fees that are more than $20. The agencies that are reputable agencies do not charge high fees, ask for donation or keep the first month's payment.

Never give your bank account and credit card numbers to any agency over the telephone.

Don't believe anyone who will tell you that you can erase your debt.

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