Credit Counseling
What is Credit Counseling?
Many universities, military bases, credit unions and housing authorities operate nonprofit financial counseling programs. Some charge a fee for their services. Creditors may be willing to accept reduced payments if you are working with a reputable program to create a debt repayment plan.
However, credit counseling organizations have faced scrutiny because of their misuse as a "nonprofit" organization. Because an organization says it is a "non profit," there is no guarantee that the services provided are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high hidden fees, or even urge consumers to make voluntary contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Be wary of credit counseling organizations that:
- Charge high up-front or monthly fees for enrolling in their program.
- Pressure you to make "voluntary contributions," which is another name for fees.
- Refuse to send you free information about the services they provide without requiring you to provide personal financial information, such as credit card account numbers, and balances.
- Try to enroll you in a debt management plan (DMP) without spending time reviewing your financial situation.
- Offer to enroll you in a DMP without teaching you budgeting and money management skills.
- Demand that you make payments into a DMP before your creditors have accepted you into the program
- Credit Cards
- Unsecured Loans
- Unsecured Personal Loans
- Unsecured Personal Lines of Credit
- Collections, Autos in Repossession
- Home Loans / Mortgages
- Auto Loans / Student Loans
- Government Loans
- Lawsuits, IRS Debt/Taxes
- Secured Debts / Medical Bills
* Individual results may vary based on ability to save funds, amount of debt, willingness of creditors to negotiate, and the successful completion of all program terms. DMB's fees not included in savings disclosure. Program does not assume or pay any debts, nor provide legal or tax advice. Prudence should always be taken by consumers when reviewing contracts and disclosure materials. DMB's services not available in all states.
