Questions to Ask a Credit Counselor
Credit counseling is sometimes an effective method of tackling debt, especially for those with relatively smaller debt loads. With this type of counseling, the debtor meets to discuss their current financial situation and develop a budget that will allow them to repay their debts in a sensible manner. As part of a debt management plan, a credit counselor might also talk to your creditors and negotiate a waiver of late fees or penalties, or possibly obtain a reduction in the interest rate.
There are many credit counselors out there. Some work for non-profits while others are employed at for-profit companies. It is important to do your homework before signing up with a credit counselor, so we offer the following sample questions below.
What Is Your Experience?
As Nerdwallet notes, many credit counselors work at nonprofits that are accredited through either the Council on Accreditation or the National Foundation for Credit Counseling. These qualifications mean that the counselor will have sufficient education and training. If the counselor is not accredited through either organization, try to drill down on how much experience the person has. Have they been accredited through a different organization?
What Do You Charge?
The purpose of credit counseling is to get out of debt, not pay hundred or possibly thousands of dollars to the counselor. A legitimate credit counselor should be totally transparent about what they charge for services.
If they are helping you create a budget, then this is usually free and you should look elsewhere if they try to charge you. However, they might charge for other services, such as debt management plans or counseling on student loans.
How Can I Get in Touch with You?
Your needs might change, in which case you might need to reassess any debt management plan with your credit counselor. Ideally, you will have an ongoing relationship. However, other credit counselors might be much harder to get in touch with and discourage continuing contact unless you pay more money.
How Will Credit Counseling Affect My Credit?
Another reason people go through credit counseling is that they want to minimize the impact on their credit score. Filing for bankruptcy could cause your score to plunge a few hundred points. But credit counseling can hurt your score in the short term. As an example, you might have to close your credit card accounts as part of a debt management plan. This could end up tanking your credit score.
Are There Better Alternatives to a Debt Management Plan?
A credit counselor should be objective. If you are deeply in debt, then filing for bankruptcy might provide a cleaner break and allow you to quickly regain your footing. It is often possible to stage a financial comeback in as little as a few years after a bankruptcy.
If you would like to discuss whether bankruptcy is right for you, give Nowack & Olson a call. Our Plantation bankruptcy attorneys have helped over 20,000 consumers find financial freedom. All you have to do is call 888-813-4737 to schedule your free consultation with one of our Plantation bankruptcy attorneys.