How To Choose a Consumer Credit Counseling Agency

Concerned about news stories of less-than-honest consumer credit agencies taking advantage of those who can least afford it, for answers and advice I turned to Steve Bucci, President of Money Management International Financial Education Foundation*, former president of Consumer Credit Counseling Service of Southern New England, nationally syndicated Debt Advisor columnist for Bankrate.com, and author of "Credit Repair Kit for Dummies."

If you're considering consumer credit counseling, Bucci offered the following advice:

• The credit counseling agency should be non-profit.

• The credit counseling agency should have been in business for at least ten years.

• The credit counseling agency should be accredited by the Council on Accreditation (COA) or the International Standards Organization (ISO). If they state that they're accredited, make sure the accreditation is current, not lapsed.

• The counselors at the credit counseling agency should be certified by an independent organization.

• If you need help with more than just credit card debt, look for an agency certified by the Department of Housing and Urban Development (HUD).

Remember: you are entrusting your personal financial information as well as your money to the credit counseling agency, so take the time to check them out to make sure they're legitimate and reputable. Here's Bucci's advice for scoping out a credit counseling agency:

• Better Business Bureau - Find your local Better Business Bureau on the BBB's Web site and call to ask how many complaints have been filed against the agency you're considering and how many of them are still unresolved. Some complaints are to be expected, but most should be resolved.

• National Association of Attorneys General - the NAAG Web site lists contact information for each state's office of the Attorney General (AG). Call your state AG and ask if any complaints have been filed or legal actions taken against the agency.

• GuideStar - This online resource provides information on over one million nonprofit organizations, including credit counseling agencies. Find the agency on the GuideStar site and check for red flags such as exhorbitant salaries, nepotism (relatives of the bosses on the payroll), and for-profit companies owned by the boss or relatives of the boss that receive large payments from the agency (some agencies funnel funds out of the non-profit organization to their own or a relative's for-profit company).

Bucci also strongly suggests looking for the following information before signing up with a credit counseling agency:

• Reasonable fees (not more than $50/month for a debt management plan).

• A fee of not more than $50 to $100 to establish your account and negotiate with your creditors.

• The agency's willingness to waive the fees if you simply can't afford them.

• A reasonable amount of time for your initial appointment. At least an hour is needed.

• A written plan.

• A written budget based on your personal financial situation.

If the agency you're considering is not willing to answer or does not spend the time to give satisfactory responses to your questions, find a different agency, says Bucci. "You want to choose an agency that is reputable, represents your interests, and is genuinely interested in helping you improve your financial situation in both the short- and long-term."

*Note: MMI is the nation's largest full service, non-profit credit counseling service agency affiliated with the National Foundation for Credit Counseling (NFCC) and is licensed to operate in all 50 states.