Reputable Credit Counseling: The Basics

• 1). Ask if the debt counselor is affiliated with an agency such as the National Foundation for Credit Counseling, which holds its member organizations to high financial and ethical standards. The NFCC also notes that some of the requirements imposed on a reputable credit counseling service are annual audits and written plans and quarterly statements that are provided to consumers. Also make sure that the counseling service is accredited by a third party, such as the Council on Accreditation (COA).
  
  
• 2). Inquire about fee structures and make sure that the debt counselor doesn't charge you before rendering services. The NFCC notes that, if the counselor states that fees are "voluntary," this is a red flag. A set-up fee should be around $50, with monthly fees in the range of $25. Inquire about what happens to your first payment; some credit counseling services keep it as a "donation," warns the NFCC. Your money should go toward paying off your debts and not to the counseling service.
  
  
• 3). Find out about the various services provided by the agency. Although a debt management plan (DMP) is often an appropriate way to address debt, the NFCC notes that it shouldn't be the only option offered. If the agency offers only one way to get you out of debt, keep shopping around.
  
  
• 4). Determine if the debt counselor will work with all of your creditors or just some. The NFCC warns that some credit counselors will work only with creditors who agree to take the consumers' adjusted payments. A reputable debt counselor will take a look at the big picture and offer a solution to all of your debts, no matter how big or small.
  
  
• 5). Find out how counseling services are delivered. The FTC advises you to seek a credit counseling agency that meets with you one-on-one. The NFCC notes that an initial session of at least a half-hour is customary; anything less, and you won't get thorough counseling.
  
  
• 6). Check out the debt counselor's reputation with other consumers. Find out if anyone has complained about the agency with the Better Business Bureau or the Attorney General's Office in your state. If complaints were filed but the agency meets all other standards, find out how the complaints were resolved.