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Choosing the right credit counselor

Compiled by Lauren Johnston | amNY.com

June 19, 2007

There are rules to choosing the right debt counselor and the first is: Do your homework!

Before you enlist an agency, check its standing with these three watchdog groups:

Better Business Bureau,
the National Foundation for Credit Counseling,

and the Association of Independent Consumer Credit Counseling Agencies.
And even then, the BBB advises proceeding with caution and sticking to these tips:
Fancy ads don't equal good service: Be wary of unsolicited offers. Most reputable agencies rely on referrals, not advertising.

No license, no good: Many states require credit counselors to be licensed. Check with the NFCC or AICCCA to make sure yours makes the grade.

Steer clear of commissions: Find out how the company employees are paid. If they work on commission, they may not be putting your interests first.

Get it made-to-order: Don't accept a cookie-cutter plan. A counselor should interview you extensively before offering a plan to help.

Put it in writing: Don't rely on verbal agreements.

Don't fall for fees: Be wary of agencies that charge large fees upfront or monthly fees. Expect to pay no more than $75 in set-up fees and $40 per month.

Don't do a DMP alone: Don't be forced into a Debt Management Plan. A good agency will make budgeting classes and other social services available too.

Guard your account numbers: If the agency demands account numbers before explaining its services, walk away.

There's no fast fix: Getting out of debt is not fast or easy. Don't believe a counselor who says otherwise.

Your checkered past will linger: No agency can remove negative information (like bankruptcy) from your credit report if it's true and it's illegal to try.