The last thing that you’d want yourself to be in is in the hands of a con artiste offering you a credit counseling program, at a time, when you are in dire need of some sound financial advice and guidance.
So, here are a few basic things that you may find pretty useful for that purpose.
Is there any minimum debt amount required for such programs?
In reality, a legitimate credit counseling agency will work with you, irrespective of your total outstanding balance amount or debt obligations.
What debt relief options do credit counseling agencies provide?
In case, the only tool is a Debt Management Plan (DMP), then you need to keep shopping to locate best credit counseling agency in your vicinity. It is an effective financial tool and many times, proves to be the most apt resolution.
However, a DMP is certainly a one-size-fits-all solution for every debt problem since what might have worked best for others may be the same in your case.
Where does your first debt payment go?
It’s hard to imagine, but then it is true that there are some credit counseling agencies that keep the first debt payments of their clients and claim that to be a donation. However, when you are going through any of these credit counseling programs, just make sure to ask about this.
What are the services offered by the credit counselling agency?
A credit counseling agency that offers a host of services is certainly a sign of serious business and so, it is healthy to work with any such company. Some of the services that they should provide is budget counselling if you are not in debt; debt counselling, if you require professional help to break free from debt’s vicious cycle; housing counseling for homeownership-related issues, if you are a first-time homebuyer, if you are seeking pre-rental, pre-purchase, reverse mortgage and foreclosure prevention counseling.
Moreover, a licensed non-profit credit counseling agency may also provide you with pre-discharge education and pre-filing counselling.
How much will a DMP will save you?
A lot of agencies claim that they can save around 50-75 per cent of your debt. These promises are too good to be true and verily an excellent way to consider such companies as illegitimate.
Basically, creditors who accept your debt repayment plan will reduce or do away with the interest and other penalties that you owe. They may not readily give any consent to reduce the principal loan amount of your debt.
Additionally, you should get everything in writing about your monthly debt payment amount, the tenure of the DMP, its costs etc from your credit counseling agency.