Are you living paycheck to paycheck? Using one credit card to pay off the next? If the answer is yes, you may want to hire a credit counselling agency to help you deal with your financial problems, organize debt consolidation, and implement a debt repayment plan.
Interview several agencies and ask specific questions before choosing one right for you.
Questions such as:
. Do you offer free educational materials? Can I access them on the internet?
. What are your fees? Do you charge initial set-up fees and monthly fees?
. What are the qualifications of your counsellors? Are they accredited or certified? If not, how are they trained?
. How does your debt repayment plan work? How will I know my creditors have received payments? Is client money put in an account separate from operating funds?
. Can you arrange for my creditors to waive late fees or to lower or eliminate interest and finance charges? (See below for additional questions.)
. What services do you offer? Look for an organization that offers a range of services including budget counselling and debt management. Avoid organizations that push a debt management plan (DMP) as your only option.
. Will you help me develop a plan to avoid similar problems in the future?
. Will I have a formal written agreement or contract with you? (Don't sign anything without reading it first. Make sure all verbal promises are in writing.)
. Are you licensed to offer your services in my state?
. What assurance do I have that information about me (including my address, phone number and financial information) will be kept confidential and secure?
. How are your employees compensated? Are they paid more if I pay a fee, sign up for certain services or make a financial contribution to your organization? (If the answer is yes, consider it a red flag and go elsewhere for help.)
Most agencies will provide a Debt Management Agreement prior to negotiating with your creditors. Review the agreement carefully to ensure it answers the following questions:
. Is there a fee to enter the debt management program and how much is it?
. Is the fee paid separately or part of the monthly debt payment?
. How is the fee calculated and when is it due?
. What are the legal consequences if I terminate the agreement or cannot maintain my payments?
. What are the debt repayment terms?
. How much will I be required to pay monthly and when is the final payment date?
