There’s a reason why people say they are “drowning” in debt, not that they are “swimming” in debt.
The latter implies ease or recreation, while the other suggests a terrifying situation where they feel helpless, and sometimes, as though their life is on the line.
For many people, having oppressive amounts of debt is a sink or swim scenario. Navigating the waters of debt relief services can be tricky, especially if you’re feeling pressured by time and a seeming lack of resources.
One lifeline option for those drowning in debt is to work with a credit counseling agency.
As with any other significant decision, knowing what questions to ask is critical. Asking the right questions will lead you to a counselor or agency that can change your financial life for the better and have a lasting impact on how you deal with your finances.
9 Credit Counseling Questions to Ask a Credit Counselor
Keep reading for nine questions you’ll want to ask before signing up with a credit counseling agency or debt management program.
1. Is your organization accredited?
Accreditation through organizations like the BSI or NFCC means that a company meets standards of training, education and customer satisfaction.
If the particular agency you’re speaking to is not accredited, ask about the counselor’s experience and training.
2. How much do I have to pay to use your service?
Fees paid to credit counseling agencies should be minimal.
The credit counseling session, which consists of reviewing your outstanding debts, monthly expenses, and income, should be free.
If you enroll in a debt management program, then you will pay an enrollment fee typically no greater than $75.
You should also have a monthly service fee included with your total monthly payment which should not exceed $50.
Some states’ fees are lower and may depend on your total debt or the total number of creditors enrolled on your personalized debt management plan.
Tip: Compare costs across a few accredited agencies.
Good agencies may also provide free educational materials, such as information on budgeting and using credit wisely.
3. Will your program affect my credit?
A red flag of a seedy company is a claim of big promises, such as that your credit will not be affected in any way if you use their services, or that they will stop the harassing phone calls from creditors or guarantees that you will never be sued.
For most people seeking help with their credit card debt, they should not be focused on their credit score (aka the ability to get into more debt). They should be laser-focused on getting out of debt.
Credit can be temporarily affected while you are in a debt management program as some creditors close out your accounts once you join the program.
However, in the long run, credit scores oftentimes improve once the program is completed.
So, the answer you’re looking for is a qualified “yes.” A good credit counselor will be able to walk you through what will happen to your credit score while you are in their program.
4. Do you offer other services besides debt management programs?
A trustworthy credit counseling agency will offer a handful of financial services and will be able to recommend the one that works best for you.
Beware of counselors or agencies who recommend a particular program before they’ve learned the details about your situation.
5. How long will your program take to complete?
While most agencies aim to get consumers out of debt in 3-5 years, beware of an agency that gives you an exact time frame of when your debt will be paid off before learning your full situation.
6. Who do I owe once I am in the program?
A reputable organization should let you know that while you still owe your creditors, your payment will go through them for distribution to your creditors.
7. How does a debt management program differ from debt settlement?
Beware of a company that only offers information on debt settlement, or that tries to steer you to one option over another before getting your details.
A trustworthy organization will be able to thoroughly describe the differences between these two popular methods of debt repayment.
8. Is a debt management program the same thing as credit counseling?
Credit counseling is a process of reviewing your financial situation to determine what kind of program will work best for you. So, the answer you’re looking for here is that a debt management program (or whichever option you are presented with) should be the last step in credit counseling.
9. How often will I hear from you?
Reputable credit counseling programs and companies practice transparency. At the very least, they should have a plan to provide regular updates on your progress and the status of negotiations with your creditors.
A trustworthy credit counselor is a valuable guide in getting out of credit card debt.
Long after you complete your program and have vanquished your debt, the lessons you learn from your agency will stick with you.
Asking questions like these will go a long way in helping you select the service and counselor that is right for you. The stakes of getting out of credit card debt are too high to leave it to guesswork.