Thousands of consumers fall prey to identity theft and various types of fraud at the hands of unscrupulous credit counseling agencies and debt relief companies in general. For instance, financial con artists are found to use the name of the consumers, their date of birth, Social Security number and other personal details to rob them of their money by taking up dozens of credit cards indiscriminately or to secure jobs.
So, if you are thinking of taking up a credit counseling manage your debts well, then you should ensure that the credit counselors have the necessary license and certifications to offer such a financial service.
Tips to locate good credit counselor
The moment you are ready to work with a credit counseling agency, then in that case you should find out the following information before signing on the dotted line:
- Accreditation of the credit counselors – You must ensure that the credit counseling agency accredited from any pro-consumer advocacy group is a respected one and is approved by the government. This type of consumer organization should ideally function independently. In this case, you may watch out for accreditation from organizations like National Foundation for Credit Counseling (NFCC), Better Business Bureau (BBB) or Association of Independent Credit Counseling Agencies (AICCCA).
- Legitimacy of the non-profit status – A lot of credit counseling agencies and debt relief service providers claim to have been conferred upon with the ‘non-profit’ status by the Internal Revenue Service (IRS). However, you may check out the website of IRS on the ‘Search for Charities’ and look up through the list of agencies that have been granted with such a status. Moreover, a non-profit status is granted on the basis of a provision mentioned in the Internal Revenue Code (IRC) under Section 501(c)(3).
- Legal compliance of the agency – As per the law, if you want to file either chapter 7 or 13 bankruptcy, then it is mandatory for you to complete an instructional course in basic personal financial management. The law also requires the credit counseling agency to be an approved one and is operating under a non-profit status. This is indispensable for you to in order to get complete discharge from your financial obligations. Moreover, ensure that the credit counseling agency gives you a certificate of completion after the course is over. You may visit the Executive Office for United States Trustees to find out a legitimate credit counseling agency.
Last but not the least, verify the type of service offered by the credit counseling agency before setting off to work with them. This is because both the term ‘debt counseling’ and ‘credit counseling’ is used interchangeably. However, they are different in the way they provide debt relief to the debtors like you. In case of debt counseling, outstanding credit balances are handled by the debt consultants. Alternatively, credit counseling sessions are conducted by government-approved and well-qualified finance professionals known as credit counselors who’ll impart financial management lessons to you and negotiate with the creditors on your behalf for better loans terms.
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