Finding a Credit Counselor
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What are your fees and donations?
Most agencies generate funds to run their business in three ways:

1. The creditors pay what are called fair-share donations. This is often based on a percentage of the money distributed to them. Fair-share donations have dropped significantly in the past couple of years, so agencies are finding other ways to compensate for those lost dollars.
2. Agencies may charge fees or ask for donations from the clients.
3. Many agencies obtain funding in their communities with grants, donations, and support from organizations like the United Way.

How much is the set-up fee?
It is reasonable to expect a one-time fee of $30-50.

There are a small number of agencies that keep the client's first payment as a set-up fee instead of sending it to the creditors. This can result in an initial fee of several hundred dollars, depending on what you owe. It's a sign that this is not the agency for you.

What is your monthly fee?
Some agencies require a monthly processing fee. This may be a flat fee or it may be based on a percentage of your payment or on the number of cards on the program. Expect to pay around $35 or 10 percent of your monthly payment in a fee.

Do you expect a voluntary contribution?
Some agencies do not charge a fee that is required, but they do ask for a voluntary contribution. Remember your savings and the help you will receive, recognize their operating costs, and give what's reasonable.

What are your hours?
Make sure their operating hours fit with the times you would be most likely to use their services.

What kind of payment do you accept?
You won't be paying with your credit cards, as you will be closing them. Most agencies will accept money orders, Western Union quick collect, and direct debit (ACH) from your bank account. Direct debit is certainly the easiest option, but you must make sure you have adequate funds in your account before your payment date each month, or you risk overdraft charges, fees from the agency (non-sufficient funds fee), and worst, loss of the program's benefits.

Are there choices for my payment date?
Some agencies allow customers to choose from two to three days each month to make their payment. For example, you may have the choice of the 1st or the 15th of the month. Other agencies allow you to choose your payment day. You may want to choose a date close to payday.

Are your counselors certified?
You will be dealing with a counselor during the process. Some agencies require their counselors be certified by an organization such as the AFCPE (Association for Financial Counseling and Planning Education) or TestTutor, Inc. Certified counselors have passed an exam demonstrating knowledge of personal financial management. Agencies with certified counselors may be better prepared to answer specific questions about your money.

What type of educational programs do you provide?
Because of their status as a nonprofit organization, most credit-counseling agencies offer some educational programs. This may range from a periodic newsletter offered in print or online to a full-blown curriculum offered in a variety of ways.

Worksheet for Selecting the Right Credit-Counseling Agency