Consumer Alert: How to choose a Credit Counseling Agency

Choosing a Credit Counseling Agency: what questions to ask and how to check that a credit counseling agency is legitimate.

Marmora, NJ (PRWEB) April 15, 2004 -- The credit counseling industry has recently been in the spotlight: some major players have been accused of misleading clients. Other agencies have been accused of masquerading as nonprofits while funneling huge fees to for-profit affiliates and their investors. Many states have begun litigation, Congress is holding hearings and investigations, and the IRS and FTC are scrutinizing the industry.

So where does an individual or family in financial distress turn?

Are there any agencies that will treat these individuals and families with dignity, privacy and fairness?

Yes", says Russell Graves, Executive Director of Consumer Credit and Budget Counseling, There are agencies out there that will provide you with the help you need and treat you fairly at the same time. In fact, most agencies fall into this bracket, but do not have the advertising budget of the few large players that are giving the industry a black eye."

He suggests that anyone considering working with a credit counseling agency thoroughly check out the agency and its practices and become an informed consumer:

-Ask if the agency is licensed in your state. More than 20 states now require licensing or some type of registration, (in fact, it is illegal to do debt counseling in 2 states).

-Check the Better Business Bureau for consumer complaints. You can check out an agencys Better Business Bureau record at the bureaus website: www.bbb.org.

-Call your states consumer protection agency. In Florida for instance, complaints about credit counseling are now the third-largest category of consumer grievances.

-Ask if the agency is accredited by COA or has an ISO certification. These are national and international accreditation and certifications; they verify best practices and ensure that proper procedures are followed. (A word of caution: Do not rely on a trade association affiliation; trade groups are notoriously lax in enforcement of so called standards". The agency that was recently closed in Utah for mismanaging customers funds was a member of the oldest trade group just weeks before the state seized its assets.)

-Ask about the agencies fees (ALL the fees). Find out how much the program is going to cost you: Does the first payment go to the creditors or is it retained as a deposit or fee? Are there any enrollment fees, or fees for a required educational program? How much is the monthly fee? Are there any other fees charged, including electronic payment fees? Are there any other required donations"?

-Ask what the affect a credit counseling program will have on a clients credit. Do not believe any agencies that promise that your credit will not be affected. A credit counseling program is a hardship program and its existence is typically noted on a credit report. While enrollment in a program does not directly affect a credit score, it will limit the availability to new credit including the purchase of a car or a home.

Consumer Credit and Budget Counseling is an accredited, non-profit, multi-state licensed consumer education and financial counseling agency that serves individuals and families in financial distress. CC&BC provides free budget and credit education and if appropriate, assists clients by structuring consumer debts, primarily credit cards, into a single affordable monthly payment scheduled over a term of 3-5 years. For more information please visit www.cc-bc.com.