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Choosing a Credit Counseling Agency

Counseling services are available to help people budget money and pay bills. Credit unions, Cooperative Extension offices, military family service centers and religious organizations are among those that may offer free or low-cost credit counseling.

Local, nonprofit agencies that provide educational programs on money management and help in developing debt payment plans operate under the name Consumer Credit Counseling Service (CCCS). Make certain that the agency is accredited by the Council on Accreditation, (COA), or the International Organization for Standardization (ISO). The counselor should also be certified by the National Foundation for Credit Counseling (NFCC), an organization that supports a national network of credit counselors.

Typically, a counseling service will negotiate lower payments with your creditors, then make the payments using money you send to it each month. The cost of setting up this debt-management plan is paid by the creditor, not you. Ask these questions to find the best counselor for you:

  • What services do you offer? Look for an organization that offers budget counseling and money management classes as well as a debt-management plan.
  • Do you offer free information? Avoid organizations that charge for information or make you provide a lot of details about your problem first.
  • What are your fees? Are there set-up and/or monthly fees? A typical set-up fee is $10. Beware of agencies that charge large up-front fees.
  • How will the debt management plan work? What debts can be included in the plan and will you get regular reports on your accounts?
  • Ask whether the counselor can get creditors to lower or eliminate interest and fees. If the answer is yes, contact your creditors to verify this.
  • Ask what happens if you can't afford to pay. If an organization won't help you because you can't afford to pay, go somewhere else for help.
  • Will your counselor help you avoid future problems? Getting a plan for avoiding future debt is as important as solving the immediate debt problem.
  • Ask for a contract. All verbal promises should be in writing before you pay any money.
  • Are your counselors accredited or certified? Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Check with your local consumer protection agency and the Better Business Bureau to see if any complaints have been filed about the counseling service you're considering.

If you have concerns about approved credit counseling agencies or credit counseling providers, please contact the U.S. Trustee Program .