Select a credit counselor with caution

Arizona Republic

The Consumer Federation of America offers the following tips for evaluating credit counseling agencies:

• Be wary of high fees, especially costs above $50 to set up a debt-management plan and monthly fees above $25 to maintain it.
• Avoid hard-sell tactics, especially for products like debt-consolidation loans.
• Ask if counseling-firm employees are paid on commission. If so, go elsewhere.
• Resist "voluntary" fees that aren't so voluntary. Some counseling firms may pressure you to pay fees, even if you can't afford them.
• Question debt-management sessions lasting less than 20 minutes. Counselors usually need at least 30 to 90 minutes to evaluate your finances.
• Resist debt-management plans as the only option. Avoid agencies that don't offer financial classes, budget counseling and the like.
• Get referrals. Don't rely on advertisements or telemarketing pitches to find a counseling agency, as aggressive marketers have been linked to consumer complaints.
• Shop around. Talk to at least two agencies before making a decision, and visit them in person if possible.
• Ask about privacy. Make sure the agency won't distribute information about your account without permission.
• Obtain details on credit concessions. Find out exactly how much lower your balance will be and how long it will take to pay off your bills. Make sure the agency will deal with all your unsecured creditors, not just those paying it a fee.
• Verify that the agency is doing its job. Call each creditor the first month to make sure they've been paid on time.