What You Need To Know About Your Debt Consolidation Counselor
Many people who have accumulated credit card debt can quickly become overwhelmed by what they owe. It can be beneficial for a person’s financial future to enlist the help from a debt consolidation counselor in order to manage his or her bills wisely and decrease debt. Just like a lawyer, mechanic, or any other professional, credit counselors have different charges, specialties, educational backgrounds and work for different organizations or firms. It is important for an individual in debt to select the right counselor to fit his or her financial needs. In order to determine whether the counselor is the right one, a person must ask the right questions.
Here are 5 questions you need to ask about debt consolidation counseling.
The first question one should ask a debt consolidation counselor is, “What is the minimum amount of debt that the counselor’s agency will take on?”
This question involves self-awareness for the debtor. It provides the debtor with the opportunity to look at total debt. Then, by asking this question to the counselor the debtor can find out if he should continue with his questions or if there is no need to continue since he is ineligible for assistance.
Once the debtor knows if he qualifies, then he can move on to other questions. This includes what “set-up” and/or monthly fees will be charged, or other miscellaneous charges.
The second question one should ask a potential debt counselor should be regarding the agency or organization itself. “Are you a nonprofit or for profit?” There are many accredited credit relief companies, including non-profit ones. Non-profit and for-profit companies differ. The creditors, whom those seeking assistance with their debt owe, often fund these non-profit companies. For-profit companies may disclose the origin of their funding.
Often, the non-profit companies seek to lower monthly payments and interest. However, it may not actually decrease what is owed. This results in the debtor paying all that is owed. The Federal Trade Commission even shares that non-profit does not automatically mean you do not pay fees. For-profit companies will try to decrease the total amount owed by negotiating with the creditors and implementing less than ethical practices like inflating consumers’ fees on their high debt clients. So it’s important to the individual seeking the help to understand how the agencies and debt consolidation counselor is compensated and how that can potentially affect the services they offer.
The third important question an individual should consider asking the agency is “Who will be responsible for the client’s case?” Will there be one person handling their finances or will it be outsourced to another agency? A lot of agencies focus on selling those in debt the service. However, they don’t actually do any work with the client’s finances including the credit relief negotiations.
This can be a big problem when it comes to making sure the customer’s information is secure. There is also the question of having client’s best interest in negotiations. The goal is to have a dedicated counselor assigned to your case. If there is, you need to know your counselor’s education as well as work experience.
The fourth question you should be asking a debt consolidation counselor is “What services the agency will be providing within the contract that the client is signing?” Some agencies provide credit counseling in addition to debt consolidation. Individuals can benefit from both but in different ways. Removing the debt one owes is great. But an individual cannot grow from the experience without truly understanding the effects of debt. How it affects one’s credit as well as debt can improve one’s credit in the future. Will the agency provide the proper tools and education to help the client build a stronger financial future? CNBC shares that a credit counselor can sit down with you and make an honest and objective assessment of your financial situation.
Detailed working process
The final question a debtor should ask when interviewing a potential debt counselor would be “How does the process work?” Are the payments being made to the creditors by the agency or the individual? What happens if the payments cannot be made? How is the debt paid off? It is important to understand if the agency’s plans fit your specific situation. These are some of the questions you need to ask them. It is also important to know the flexibility of the plan in cases of emergencies. it is a good idea to know what your payment options are.
Be sure to ask all the potential credit relief agencies and debt consolidation counselor the same questions. This would help you make a proper comparison among all of them. Take lots of notes and leave the interview with a contact name and phone number. There would be times when questions slip your mind or come to mind after the initial interview. It is important to be able to call the agency for additional assistance if needed. In all these, you should not forget your main goal which is debt consolidation. As well as provide credit relief with relevant tools to help rebuild a healthy financial situation.