Credit Counseling Agency

Credit counseling organization

Credit Counseling Agencies (CCAs) offer financially distressed consumers with assistance in managing their money and paying their debts. Most traditional CCAs either charge nothing or solicit modest contributions from clients to help defray their expenses.

CCAs have a number of options to offer their financially-distressed clients, depending on the client's individual circumstances, which range from simple advice and guidance on managing finances to (in extreme cases) advising that consulting a bankruptcy attorney may be the consumer's best option. In addition, CCAs, since the industry's inception, have offered to put certain clients into a payment program commonly termed a "debt management plan" ("DMP").

You may find help from one of the following services:

Nonprofit credit counseling agencies can do business with little cost to consumers because they get paid from creditors. DMPs generate revenue for CCAs in two ways. First, creditors voluntarily rebate to CCAs a small percentage of the funds that the organizations disburse to them. These payments are called "Fair Share" contributions. Second, some CCAs solicit "contributions" or "donations" from DMP enrollees, usually consisting of up-front and monthly fees.

But beware that just because an agency says it is "nonprofit" doesn't guarantee that its services are free or affordable, or that its services are legitimate. In fact, some credit counseling agencies charge high fees, some of which may be hidden, or urge consumers to make "voluntary" contributions that cause them to fall deeper into debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. Many universities, military bases, credit unions, and housing authorities operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.