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As part of the 2005 Bankruptcy Reform Act it was decided by those who wrote the law that consumers going into bankruptcy should also go through credit counseling to help learn and understand how and why they ended up in financial straits in the first place.
If you use a credit counseling program, we encourage you to use the list provided by the United States Bankruptcy Trustees website. You can visit this link for a list of approved credit counseling companies: Approved Credit Counseling Agencies
The first purpose of a credit counseling program is to advise you on managing your personal money and debt and work with you in developing a household budget. There are some who believe that if you choose a credit counseling agency that you should use one that is a non-profit credit counseling agency. The reasoning is a for-profit agency will likely nickel and dime you to death, while a non-profit agency may receive funding from other sources besides just you, as their client.
Questions to ask:
- Are they non-profit?
- Are their counselors certified and trained in the area of credit counseling and what certifications they hold.
- Do they offer free educational materials? Avoid credit counseling agencies that charge fees for every little thing.
- How do they earn their fees? What fees will they charge you to begin and ongoing?
- Is there a contract or agreement to sign? We believe that you should see agreements and promises in writing.
- Are they licensed to offer credit counseling services in your state?
- Can they help stop the harassment from creditors?
- How will their services benefit you when it comes to working with your creditors?
- How long will their program typically last?
These are not necessarily the only questions you should ask but can be a good starting point. Be sure to write your questions in advance of calling any credit counseling agency so you are prepared.