How to Find the Best Consumer Credit Counseling Agency

The vast majority of credit counseling agencies in the U.S. operate as a nonprofit company. That does not necessarily mean they are charitable organizations. They still operate like any business does, with an eye on income and expenses. But they do have to meet some strict IRS standards to qualify as a nonprofit consumer credit counseling agency. They also must offer certain things for free as a result of their tax designation. Free budgeting education, and free no obligation consultations with a certified credit counselor, are two examples of what these agencies provide to the public.

More than being regulated by their nonprofit status, credit counseling companies are heavily supervised by each state they offer debt management programs in. Any legitimate debt and credit counseling program being offered to you in your state should be managed by a state licensed credit counseling service provider. Several states will only license a company that is nonprofit, such as; Arkansas, California, Connecticut, Hawaii, Louisiana, Kentucky, Massachusetts, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Wyoming.

Credit counseling and debt management help in California can be offered to you through a for profit company as long as that company has a physical location in your state.

The rest of the states have strict rules for how a credit counselor must work with you, just like the ones listed above. Companies offering debt management plans and credit counseling services do have to be licensed in the other states, but they do not have to be a nonprofit.

One of the benefits you get from strict state regulation of consumer credit counseling services is that fees for debt management programs are set by law. These fees cannot be exceeded. Also, many states have their own auditors that do travel to perform “on site” audits of different nonprofit credit counseling agencies.

Why does any of the above matter to you when you are looking for the best company to work with? That will become more obvious below.

Credit Counseling Companies Offering Debt Management Plans Answer to Your Creditors Too

In part one and two of this series I hit on how debt management plans through consumer credit counseling companies are set up to work in cooperation with your creditors, like credit card banks, doctors and hospital billing offices etc. I won’t hit on this aspect much in this piece. But it is worth pointing out that your creditors agreements with a credit counseling agency, when weighed alongside the fact that your state actively regulates and audits these nonprofit services, puts you in a position to be better protected as a consumer than in nearly any other financial service you can compare credit counseling with.

With the amount of outside influences exerted over nonprofit consumer credit counseling services – there are just not many things to get creative with.

State and federal compliance is not something these nonprofit agencies take lightly. Rules and laws are important. But debt management companies take creditor and bank relationships just as seriously – perhaps even more so. Most nonprofit credit counseling companies receive at least some of their funding from banks. So while a credit counseling service could be shut down or fined for not following rules and laws in your state, they also need the funding resources from banks in order to fulfill their nonprofit mission, or to even keep the doors open.

With that backdrop established….

How can you pick the right debt management company?

You really do not have much to work with to compare one debt management company to the next for legitimate help consolidating your monthly credit card and other bills into one lower payment. None of them facilitate your debt payments differently than the other. But different debt management companies do offer other helpful programs, so there are other reasons to work with an agency besides a getting the lower interest rates in a DMP.

When it comes to debt management plans and other debt related topics, here is a check list of a sort for your reference:

• Is the consumer credit counseling agency licensed in your state?
• Are they a federally approved nonprofit agency?
• Are they a Department of Justice approved nonprofit agency that can offer pre and post bankruptcy counseling certificates (only applies if you are filing bankruptcy and would not matter if you are enrolling in a debt management plan)?
• What is the agencies record with the BBB?
• Are they a HUD approved nonprofit housing counseling agency (applies to housing only, not a DMP – more on nonprofit housing counseling in a different article)?
• Can the credit counseling company help with all, or nearly all, of your unsecured debts?

With the exception of the smallest mom and pop credit counseling agencies, most companies can administer and provide education and resources for all of the bullet items above. Virtually every one of the national nonprofit credit counseling companies offers help with the above bullet items – in house and through their own full time staff.

So… what’s to compare? When it comes to how one company can reduce your monthly payments with credit cards and other debts, they will get pretty much the same results, and their fees (which are low) will be much the same too, as they cannot exceed state caps. All of them have counselors and customer service reps you can call and speak with during normal business hours Monday through Friday, and many of them are open on a Saturday.

Is there anything useful to compare one credit counseling service with another?

Yes, but first I want to point out that credit counseling companies, even all the nonprofit agencies, are operating a business. They have to sign people up into their core product, which is a debt management plan, that helps reduce your credit card interest rates and monthly payments. I know some to be a bit too focused on enrolling new members for credit card debt consolidation. You can eliminate the concern that someone is more interested in getting you into a workable budget and debt repayment plan, than comparing other options with you, by reading the first two articles in this credit counseling series:

Once you determine that a debt management plan is a solution that you can succeed with, finding the best credit counseling agency is as simple as a phone call. You will actually be going into the conversation with a counselor well prepared by having read the above two articles. Because all of the agencies are going to perform their functions and services nearly identically, pay attention to the person on the phone and grade them. If the front line counselor is honest and helpful, that culture is much more likely to be part of the agency itself.

If you are looking to work with a consumer credit counseling service that has set itself apart from the others out there, call 888-317-8770. That call will put you in touch with a counselor at one of the top credit counseling companies in the nation.

The Most Important Thing When it Comes to a Credit Counseling Agency:

The key is not so much about finding the best credit counseling company to get help from, as much as it is finding out if your income, budget, and debt struggles can be solved by enrolling with the debt management company to begin with. Reading the two articles linked above will help you understand if a debt management plan is the best way for you to manage your credit card bills, or if you can cross credit counseling services off of your list of debt solutions.

If you want to accurately review how a debt management plan will work for you; get lower interest rate quotes; know what your lower monthly credit card payments will be down to the penny; learn which of your creditors work with credit counseling services, and which do not – you have to call and speak with a certified counselor. You can save yourself time reading credit counseling and debt management plan reviews, because there is just not much to compare. Just pick up the phone and call.

I do have one caution: The most widely understood definition of a debt management plan (DMP) is working with a nonprofit credit counseling service to lower your monthly bills to an affordable level and consolidating your debts in the plan to a single payment. Other debt relief companies try to blur the lines of this definition in order to attract you to their products or services that are nothing like working with a debt counseling service in a DMP. If you reach out to a person or company who is offering you anything other than a plan to pay your credit card, and other bills, on a set day every month until your full balances are paid off (at a lower interest rate), you are being offered something other than a debt management plan. A legitimate nonprofit credit counseling company does not blur lines. They are too heavily monitored and audited by your state regulators as well as subject to business practice reviews by your credit card banks. If someone is okay with blurring the lines about what and how a debt management plan works when speaking with you, they are likely willing to blur the lines of whatever it is they have to offer you. Blurry debt relief service sales people are not who you need advice from. And too good to be true debt solutions are often just that – Not True.

If you have questions about a consumer credit  counseling service, or debt management plans in general, before calling an agency, or while you are already enrolled with one, post in the comments below for feedback.