How to Shop for a Good Debt Management Program

You deserve to feel completely certain that you’ve picked the best organization to help you solve your financial issues. We’ve prepared this list of questions to help you find the right organization to represent you.

1. Will You Send Me Information About Your Organization and Programs?

A credit counseling organization should be willing to give you information about its programs and services. You should not have to provide any confidential information — such as your account numbers and balances – before they give you information about their services. Look for an organization that clearly displays and shares their program information, applications and agreements online and through the mail.

If the organization you are considering will not give you information up front about its programs, consider this to be a warning sign. Some organizations ask for this confidential information to help them determine if you have enough debt for them to be interested in helping you.

2. Is There a Minimum Amount of Debt I have to Have in Order to Work with You?

The answer should always be “no.” No organization should turn you away because you do not have a minimum amount of debt.

3. Will You Help Me with All My Debts?

Most credit counseling organizations work only with credit card accounts because lenders of secured loans – such as mortgages and auto loans – do not make automatic reductions in rates and terms. However, some counseling organizations will make payments on your secured debts as a matter of convenience. This service may be important to you if you want to write fewer checks each month.

4. Can You Still Help Me if I Cannot Afford the Minimum Payment in a Debt Management Program?

If you can’t pay the minimum payment, a good organization will still be able to help guide you to other resources. Steer clear of organizations that dismiss you or suggest that you file bankruptcy because you cannot meet their debt repayment requirements.

5. How High are the Fees?

Look for an organization that charges no or low fees. Some organizations charge high upfront fees — $250 or even your first month’s payment to your creditors — to participate in their debt repayment program. Ask for information about set up fees, monthly fees and other charges. Those fees should be clearly disclosed. And there should never be a fee to close your account.

6. What Kind of Security Measures Do You Have to Protect my Information?

When you work with an organization you disclose a lot of private information, such as your social security number, account numbers and account balances. It is important that the organization you select protects your confidential information.

Read the organization’s privacy policy. Make sure no outside party has access to any information you send without your permission.

Ask about 24-hour monitoring for fire, smoke, intrusion, water leakage and glass breakage. Be sure they shred all confidential information before disposing of it. Know that they use high technology solutions to protect your data against loss, such as redundant servers and storage media, secure encrypted Web servers, daily backups with off-site storage and security firewalls to control information access.

7. Can I Get Up-to-Date, Regular Reports of the Status of my Account?

You want easy access to your debt repayment account information at a credit counseling organization so that you can check on your account status at any time. If you can only get updates by telephone, find out if a knowledgeable person will be available at the time that you would normally call.

Look for secure, encrypted Web access to your account that gives you the latest information on your account 24 hours a day, seven days a week. You should be able to see when your payment was received, when it was sent to your creditors and the amount of the payment to each creditor.

8. Will you Sell my Name or Address to Outside Parties?

Make sure that if you work with a particular organization, that organization does not disclose your confidential information to inappropriate third parties. Ask the organization for its privacy policy and whether your name and address will appear on any mailing lists sold to outside organizations.

9. Does Counseling Affect my Report?

It might sound strange, but the correct answer is maybe. Credit counseling organizations do not report your participation in their programs, but many creditors do. That reporting could have an impact on your credit score and affect the interest rates you are charged on current and future debts. Counseling agencies should be willing to explain this potential impact on your credit report.

10. How Often do you Send Payments to Creditors?

Look for an organization that sends weekly disbursements to creditors. If an agency only disburses payments once or twice a month and you send your payment in late, then that amount will not be forwarded to your creditors until the next round of payments are sent. That could delay your payment for weeks. You need payments sent to your creditors at least weekly.

11. What are my Payment Options?

You need convenient options for your monthly payment. Choose an organization that gives you a variety of choices.

12. Does Your Organization have Accreditation?

Look for an organization that has received official accreditation from an independent, third party, such as BSI Management Systems. That certification means that the organization has gone through a rigorous review of its policies and procedures.

13. What Kind of Training do your Counselors have?

Good counseling organizations use internal and external training programs for their counselors. The external training should include accreditation from an independent certification program.

14. Are you Comfortable?

A typical debt consolidation program takes as long as five years. That’s why one of your most important criteria should be how comfortable you feel with the staff at the counseling agency. Look for people who are courteous, friendly and willing to give you as much time as you need to answer questions and explain the program.