Points to Consider When Choosing a Credit or Debt Counseling Agency


If you are like the average American, you have several credit cards and are facing challenges meeting your monthly bills. With the recession, many people have faced job loss and major financial disaster. Although coping with overwhelming debt can be stressful, there are solutions available, including working with a credit or debt counseling agency. Before signing a contract with a debt relief organization, there are some questions you should ask and regulations to be aware of.


The rules regarding how credit and debt relief agencies charge for their services changed at the end of 2011. In the past, many such organizations charged up-front fees for their services. However, large numbers of consumer complaints regarding services not rendered by credit counseling companies resulted in the Federal Trade Commission changing how fees can be charged.

Under current regulations, debt relief and credit counseling companies may not charge up-front fees. They are only allowed to charge fees after rendering services and when they can show evidence of their efforts, such as a debt settlement agreement negotiated on your behalf.

Credit counseling and debt relief companies must also provide you with information regarding what fees you will be charged before you sign a contract. They may not add fees without notifying you in advance.


Credit and debt relief organizations must also disclose certain things to you. They must provide you with information regarding the potential consequences of not paying your debts, including the impact to your credit report.

They must also provide you with realistic estimates of the amount of debt reduction or relief you can expect from their efforts. They may not claim to have the ability to eliminate your debt completely through their efforts, since that is not possible.


Another change made by the Federal Trade Commission at the end of 2011 regulates how and what credit counseling and debt relief organizations are allowed to advertise. If they include statements from “customers” regarding their services, those statements must be from actual customers that are documented.


Before contracting with a debt or credit counseling agency, ask if they maintain any professional association memberships. The most popular and reputable organizations include the National Association of Certified Credit Counselors, the National Federation for Credit Counseling, the Association of Credit Counseling Professionals and the Association of Independent Consumer and Credit Counseling Agencies. Also, ask what professional training and association memberships their individual counselors have received and maintain.

The advantage of working with an organization that maintains professional association memberships is that these organizations only accept members that maintain the highest level of professional and ethical activities. Member organizations must meet certification standards, educational standards and operate legally.

Consumer Complaints

In recent years, debt relief agencies have received many consumer complaints. Unfortunately, as financial distress has increased, it has made many consumers vulnerable to unethical organizations that promise credit solutions, but have failed to deliver on those promises. Although the recent changes by the FTC to rules of operation for credit counseling organizations have curbed many of these problems, it is a good idea to research consumer complaints before signing a contract for services.

The Better Business Bureau is a good place to look regarding consumer complaints. As a nationwide organization, they publish information regarding consumer complaints on their website.

You can also learn about consumer complaints by looking at your state Department of Consumer Affairs website. You can find out if there have been complaints filed, what the complaint is regarding and the outcome of the investigation. Some states also regulate operation of credit counseling agencies and information regarding organizations licensed to operate in your state will be located on the Department of Consumer Affairs website.

Working with a debt relief or credit counseling agency can be an excellent solution to financial problems. When interviewing and considering potential organizations, make sure you do your homework and ask lots of questions. It will save you money and frustration in the long run.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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