Can You Trust These Debt Management and Credit Counseling Services?

A Credit Article Contributed by Mark Mcclelland

Is It Possible to Find a Reputable Debt Management and Credit Counseling Service?

As with all things financial, it's best to look and look hard before you leap, especially when it comes to finding a reputable debt management and credit counseling service.

To be sure, there are some decent and honest firms providing debt management and credit counseling services, but there are also a lot of companies that have little, if anything, to offer of value. And at it's worst, there are organizations purporting to be credit counseling services that are outright scams, leaving you worse off then you were to begin with.

As you web surf around looking for a good credit counseling and debt management service, keep the following questions in mind.

How Do Credit Counseling and Debt Management Services Make Money?

This is probably one of the most important questions to ask a service you may be considering using. Why? Because all organization, even nonprofit ones, require funds to operate, and how they get those funds is of paramount importance to you as you're shopping around. The answer they give will tell you a lot about the organization.

It's important to know what fees they charge for their services and how those fees are paid. Sometimes they charge you directly; sometimes they charge your creditors for handling your debt management needs. Neither is necessarily good or bad, but it's certainly to your benefit if they charge your creditors.

If they charge you, it's typically in the form of them taking a bit of your monthly payment to them off the top, before they pay your creditors. You should steer away from companies that take a big chunk of you monthly payment. And avoid like the plague any credit counseling or debt management service that charges up-front fees.

If they collect fees from your creditors, your creditors are paying them voluntarily, since it was you who engaged the credit counseling and / or debt management services company. Your creditors simply want their money back.

Regardless of how they're paid, if you engage a company to provide these services you should insist on getting a monthly statement regarding your debt management plan that reflects the amount you've paid the company, the dates and amounts they've paid your creditors, and their fees. Reputable companies will provide one without your asking for it.

What Promises Does the Credit Counseling and Debt Management Company Make, and are They Accredited or Not?

After the question of how they get paid, the answers to these two questions will tell whether the organization you've found is likely to be a good one or whether you should move on.

Knowing that, in general, there are no such things as guarantees when it come to your credit report, if the company you're considering promises to fix your debt problems for mere pennies on the dollar, or says that they can repair your credit history by forcing the credit reporting agencies to remove data that's accurate, timely, and legitimate, or claims that it's debt management program won't affect your credit rating, you'd be wise to move on. There isn't a reputable firm around that would even consider making claims like these.

And as for accreditation, it's better to stick with credit counseling and debt management services that are accredited by the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. It's far less likely that an accredited organization will charge you exorbitant fees or take advantage of you than one that's not.