What You Need To Know About Your debt consolidation Counselor
Many people who have accumulated credit card debt can quickly become overwhelmed by what they owe. It can be beneficial for a person’s financial future to enlist the help from a debt consolidation counselor in order to manage his or her bills wisely and decrease debt. Just like a lawyer, mechanic, or any other professional, credit counselors have different charges, specialties, educational backgrounds and work for different organizations or firms. It is important for an individual in debt to select the right counselor to fit his or her financial needs. In order to determine whether the counselor is the right one, a person must ask the right questions.
Here are 5 questions you need to ask about debt consolidation counseling:
The first question one should ask is, “What is the minimum amount of debt that the counselor’s agency will take on?”
This question involves self-awareness for the debtor by providing an opportunity for the debtor to look at his or her total picture and see the total amount of money that is owed. Then, by asking this question to the counselor the debtor can find out if he should continue with his questions or if there is no need to continue since he is ineligible for assistance.
Once the debtor knows if he qualifies, then he can move on to questions about what “set-up” and/or monthly fees will be charged, or other miscellaneous charges.
The second question one should ask a potential debt counselor should be regarding the agency or organization itself. “Are you non profit or for profit?” There are many accredited credit relief companies, including non-profit ones. Non-profit and for-profit companies differ. The creditors, whom those seeking assistance with their debt owe, often fund these non-profit companies. For-profit companies may disclose the origin of their funding.
Often, the non-profit companies seek to lower monthly payments and interest but may not actually decrease what is owed, which results in the debtor paying all that is owed. For-profit companies will try to decrease the total amount owed by negotiating with the creditors and implementing less than ethical practices like inflating consumers’ fees on their high debt clients. So it’s important to the individual seeking the help to understand how the agencies are compensated and how that can potentially affect the services they offer.
The third important question an individual should consider asking the agency is “Who will be responsible for the client’s case?” Will there be one person handling their finances or will it be outsourced to another agency? A lot of agencies focus on selling those in debt the service but don’t actually do any work with the client’s finances including the credit relief negotiations.
This can be a big problem when it comes to making sure the customer’s information is secure and the negotiations are in the client’s best interest. On the other hand, if there is one counselor assigned to the debtor case, questions regarding the counselor’s education and work experience should be considered.
The fourth question should be “What services the agency will be providing within the contract that the client is signing?” Some agencies provide credit counseling in addition to debt consolidation. Individuals can benefit from both but in different ways. Removing the debt one owes is great. But an individual cannot grow from the experience without truly understanding the effects the debt has on one’s credit and how to improve one’s credit in the future. Will the agency provide the proper tools and education to help the client build a stronger financial future?
The final question a debtor should ask when interviewing a potential debt counselor would be “How does the process work?” Are the payments being made to the creditors by the agency or the individual? What happens if the payments cannot be made? Understanding how the debt is being paid down is critical to understanding if this agency’s plan is the best fit for the debtor. It is also important to know the flexibility of the plan in case an emergency arises and payments cannot be continued.
Be sure to ask all the potential credit relief agencies the same questions so a proper comparison can be made among them. Take lots of notes and leave the interview with a contact name and phone number. If questions were forgotten or come to mind after the initial interview, its important to be able to call the agency for additional assistance if needed. No matter what agency is selected, the ultimate goal is to consolidate the debt and provide credit relief and the tools to help rebuild a healthy financial situation.
I am a Senior VP at DebtConsolidation.com - the leading provider of Debt Consolidation for Americans.
