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If you are living from paycheck to paycheck and never seem to have enough money to pay your bills, you may be a candidate for credit counseling. However, credit counselors may not be what your thinking they are. You see, there are many types of “professionals” offering you help to get back on your feet, financially speaking, and most of them will do exactly the opposite. After the real estate crisis of 2008 an army of foreclosure avoidance and debt relief “consultants” appeared out of thin air just as the business for subprime mortgage lenders ran into the ground. Needless to say, these are not type of counselors we are talking about when we mention credit counselors. The trouble is they are hard to set apart sometimes.
The government is offering struggling borrowers who are at risk of defaulting on loans or need a hand to get their financial matters in line the opportunity of speaking to debt relief specialists who know how to help you reduce debt without resorting to more high interest loans that only offer a short term relief. These are counselors financed by government subsidies who are not in it for your money. So, how to set them apart. Here are some things to look out for.
Choose credit counseling companies that help you organize your finances by creating a budget and offer you free credit workshops and educational material. Choose credit counselors that employ certified operators in consumer credit, debt management and budgeting. Avoid like the plague any company that requires you to provide personal information before they can help you. Call your state Attorney General, your local consumer protection agency and the Better Business Bureau. Find out what they have to say about the credit counseling companies you are looking into. You should only consider accepting the help of government approved credit counseling companies. How do I know if they are government approved? Easy, visit the Department of Justices’s U.S. Trustee Program website and see if your potential companies appear on their list of approved credit counseling agencies.
Strike out any company that does not pass these tests. Once you are left with an approved shortlist of credit counseling agencies ask the following questions.
What services do you offer? Avoid companies that push a debt management plan down your throat as your only option.
Do you offer information? Avoid agencies that charge for debt management information.
How are your employees compensated? Avoid agencies who offer commissions to agents who sell certain debt management products.
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