Regardless of financial status, nonprofit credit counseling organizations provide financial advice, including free aid. If you have just lost your job and are having trouble figuring out your budget or want to investigate your choices for paying off your debt, you could find that you need their assistance.
There is a good chance that a nonprofit credit counselor in your area can assist you. Still, numerous organizations provide support on a national scale through the telephone or online. Not-for-profit credit counseling organizations provide several services, some of which include general guidance on personal finances, counseling for homeownership, and others. Here's a comprehensive look at what's available and information on how to choose an agency and get started.
Services Available At Credit Counseling Agencies
Credit counseling organizations often provide the following primary services:
General Budgeting:
Your financial life, including income, spending, and financial objectives, is examined during a free introductory consultation for around one hour. After this session, you and the counselor may determine whether you may benefit from more counseling, including debt counseling or assistance managing your credit.
Debt Management Plan:
A counselor will consolidate your consumer debts, and the interest rate on your credit card debt will be lowered. This will allow you to pay off the debt in three to five years with only one monthly payment. In most cases, the plan includes both an initial enrollment charge and a recurring monthly premium.
Bankruptcy Counseling:
The two sessions of financial education that bookend the bankruptcy process: the first one takes place before you file for bankruptcy, and the second one takes place just before your debts are dismissed. There is a little charge for each.
Student Loan Counseling:
Options for repayment are reviewed, and a counselor may be able to mediate interactions with the companies that issued your loans. There could be a free level of service in addition to premium ones.
Housing Counseling:
A range of counseling choices is available to help you comprehend and handle the expense of housing, regardless of whether you are having difficulty making your rent payments or are a first-time home buyer. Depending on the service that is selected, there may be a charge.
While credit counseling companies often provide many, if not all, of these services, the debt management programs they provide are the primary reason people seek them out. Debt management programs are a less extreme method of obtaining debt relief than filing for bankruptcy or settling your debts. In addition, many organizations provide online educational courses and materials, most of which are offered at no cost to users.
Things to Look for in Credit Counseling Agency
Finding a credit counseling firm that you feel comfortable dealing with is the first step in the process. Consider:
Accreditation and Certification:
A smart approach to ensure that the agency you are dealing with is respectable is to check that it has received the appropriate accreditation and certification. Be suspicious of any firm that appears to be a credit counseling service but is really in the business of making money, so be careful what you ask for.
Most nonprofit organizations are members of either the Financial Counseling Association of America or the National Foundation for Credit Counseling. To maintain consistent training and quality among counselors, these organizations have certification standards. They also need accreditation, which is having an independent authority verify that certain standards of practice are being fulfilled.
Access:
Ask yourself whether you'd like assistance in person, over the phone, or online when selecting a credit counseling business. Even though numerous organizations have been granted accreditation in all 50 states, the vast majority only provide in-person counseling in a limited number of locations.
Cost:
The cost of the services varies depending on the agency, the state, and the individual's financial situation. When you commit to a service, check how much you'll pay monthly, so you completely comprehend the entire cost.
Be aware that credit counselors working for charitable organizations are not the same as credit repair corporations working for profit, which provide services you may often do on your own. Credit counseling programs are distinct from debt settlement, which is touted as a fast cure but is inappropriate for most individuals.
Bottom Line
Ensure you understand all that is included in the debt management plan you are enrolling in with a credit counseling company before you do so. This comprises the debts included in the plan, your monthly payment, and the distribution of those payments. You may also inquire about having fees waived, or interest rates lowered and determining the total number of payments necessary to become debt-free. Remember that if you work with a nonprofit organization for credit counseling, the first appointment you book with them should be free. Before committing fully to credit counseling, this might give you a chance to evaluate whether or not it can benefit you.
