How to Select a Reputable Credit Counseling Agency

People under financial strain may benefit from working with a credit counseling agency -- as long as they choose an agency that is reputable. There are a lot of fly-by-night operations that call themselves credit counseling agencies, but leave clients in more financial trouble than when they started.

A reputable credit counseling agency will provide free information about the services it provides. Representatives welcome your questions. Reputable organizations will teach you how to develop a budget, organize and pay down your debts, and offer free educational materials.

Instructions

1

Organize all of your financial information so you know the extent of your debt problems. Once you acknowledge to yourself you need help, you have to get organized so you know the extent of the help you need.

2

Start looking for a credit counseling agency. Don't call the first company you see advertised on late-night television. You can start the search online. The United States Trustee Program keeps a list of approved credit counseling agencies on its website, and you can look for complaints about specific companies at the Better Business Bureau's website.

3

Narrow your list of potential credit counseling agencies and conduct "interviews" with the top three to find the best fit for you. Ask whether they are licensed to offer services in your state; whether the counselors are certified by an outside organization (such as the National Foundation for Credit Counseling); whether employees are paid more if you sign up for certain services (if they are, run); and anything else that is important to you. Look at the materials the agency sends out to potential clients. Do they offer educational materials for free and without asking you about your situation? If not, go somewhere else.

4

Once you've conducted your interviews, you should have the information you need to select the agency that is best for you. Arrange a meeting to discuss your particular situation. Some agencies have offices where you can meet face-to-face with a counselor, while others offer phone sessions and live online chat. You should bring all of your financial information to the meeting and be completely honest with the counselor when you discuss your situation.

5

Create a plan. Work with your counselor to determine the best plan of action -- that could include going on a debt management plan (DMP), under which the agency works with your creditors and sends out monthly payments on your behalf (with money you provide to the agency each month), working with creditors individually yourself, or going to a pre-bankruptcy counseling session. You should leave your counseling session with a realistic budget and an action plan for getting out of debt.