US Financial Management, Inc.

Is the counseling agency affiliated with major industry groups?

There are two major debt industry groups, The National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. Affiliation with one of these is no guarantee you have a good agency but these groups do have a set of standards which need to be followed, so it is a start.

Are there large up front fees?

Credit counseling agencies will usually charge a small fee to set up your account. They will then charge a fee to administer your plan each month.

If a large fee is required to begin your plan, watch out. Some companies will charge large upfront fees and then disappear with the client's money. You need to be sure the money you are paying is going to your debts and not being siphoned into the pocket of your credit counselor.

Can you really do that for me?

Some credit counseling agencies make unrealistic promises. If statements made seem too good to be true, you need to pin them down. Settling your debts for little money or without harming your credit rating is not realistic.

If they insist they can, ask for the promises in writing. Chances are they will not be willing to do this if they cannot deliver. If they do put it into writing, you will have something to use for evidence if legal action becomes necessary.

Which of my creditors have you worked with in the past?

Make a list of your creditors. You want to compare it to the creditors they have worked with in the past. Have they been successful working with your creditors in reducing payments, lowering interest, and eliminating fees?

Not all creditors will work with credit counselors. If all or most of your creditors will work with the credit counselor, you should investigate these services further. If not, credit counseling won't do you much good. To protect yourself, ask for a list (in writing) of any of your creditors they have worked with in the past.

Will my creditors be paid on time each month?

Two things come into play here. What are the due dates of each creditor and when during the month do you get paid? Nothing defeats the purpose faster than paying a creditor late after you have set up a new payment schedule.

Some credit counseling services use a set date each month to make payments from the money you have given them. If they don't have your creditors change the due date you could be socked with late fees each month. Find a service that adjusts the due dates of your bills to work around the days you get paid.

How do I pay you each month?

The credit counselor can't pay your creditors until you pay them each month. Will they remove money from your account with an electronic transfer each month, or are you required to send them a guaranteed check or money order? You want to make it as easy as possible for this plan to work. Look for a service that will withdraw funds from your account automatically each month.

When and how often will I get statements of my accounts?

Just because you have turned over a portion of your financial life to someone else to run, does not mean you don't need to keep track of what is going on. Your statements should break down your payments so you can see where the money is going. How much is going to interest, how much to the principal balances, and how much is being paid to the credit counseling service.

Who can I call?

When you have a problem or question can you speak with someone on the phone? Are you able to speak to the same counselor each time? If not, how long does it take to return phone calls?

Do this up front. Make sure you can deal with the answers you receive. Then test the service to see if they live up to what they have said. Check their service out before you sign on the bottom line. If you find that you can't get questions answered or telephone calls returned, look for another service. Going through credit counseling is stressful enough without any added problems.

These questions will give you a good idea of what kind of service you have found. There are other questions you may ask. If you think of any do not hesitate to ask and don't stop asking until you get the answers you need. It is your money.