One of the questions we frequently get asked at the Washington Department of Financial Institutions (DFI) is where can I go to get help with my debt?
Credit counseling agencies work with you to solve your financial problems. These organizations offer services through local offices, the internet, or via phone.
Credit counselors will discuss your financial situation with you, and help you develop a personalized plan to solve your money problems. Credit counselors typically negotiate lower payments with your creditors, and then make payments using money you send them each month.
Ask these questions when seeking a debt counselor:
- What are your fees?
Ask what fees you will be charged. Specifically, ask about any set up fees.
- How will the debt plan work?
Ask for details on how the debt management plan will work. Which debts can be included in the plan and will you receive balance updates?
- Ask for a contract.
All verbal promises should be in writing before you pay any money.
- Are you accredited or certified?
Legitimate credit counseling firms are affiliated with either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
- Check if any complaints have been filed.
Check with the Better Business Bureau to see if any complaints have been filed against the counseling service.
Finding a Credit Counseling Agency near You
Both the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies allow you to search for counselors near you via their websites.
Visit
http://www.nfcc.org/FirstStep/firststep_01.cfm or
http://www.aiccca.org
Warning on Debt Settlement Scams
Be wary of organizations that pressure you to enter debt settlement programs and charge substantial up-front fees. Also be wary of organizations that promise to remove accurate, but negative information from your credit report. The Federal Trade Commission says that negative information, if it is accurate, cannot be removed legally from your credit report.
Debt Consolidation vs Credit Counseling
Many people confuse debt consolidation services and credit counseling services. Debt consolidation typically involves taking out a new lower interest loan to pay off multiple high interest debts. The consolidation loan is generally secured against the borrower’s assets such as a home or a car. For more information on the difference between debt consolidation and credit counseling visit the FTC website at
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm.
