Managing Debt: Choosing a Credit Counselor

Managing Debt: Choosing a Credit Counselor

Eileen St. Pierre, The Everyday Financial Planner

You’ve probably heard the commercials for companies who want to help you get out of debt.  Most reputable credit counselors are non-profit organizations.  While they can offer their services at local offices, online, or on the phone, counseling tends to be more effective if done in-person.


  • Try to stay local – many universities, military bases, credit unions, and county Cooperative Extension offices offer credit counseling programs.
  • Ask for referrals from your friends, family, financial institutions, and local consumer protection agency.

Keep in mind that “non-profit” status does not guarantee that services are free, affordable, or even legitimate.  According to the Federal Trade Commission (FTC), some credit counseling organizations charge high fees (which they may try to hide), while others might urge their clients to make “voluntary” contributions that can cause more debt.

The FTC provides a list of questions to ask:

  1. What services do you offer? Look for an organization that offers a range of services, including budget counseling, and savings and debt management classes. Avoid organizations that push a debt management plan (DMP) as your only option before they spend a significant amount of time analyzing your financial situation.
  2. Do you offer information? Are educational materials available for free? Avoid organizations that charge for information.
  3. In addition to helping me solve my immediate problem, will you help me develop a plan for avoiding problems in the future?
  4. What are your fees? Are there set-up and/or monthly fees? Get a specific price quote in writing.
  5. What if I can’t afford to pay your fees or make contributions? If an organization won’t help you because you can’t afford to pay, look elsewhere for help.
  6. Will I have a formal written agreement or contract with you? Don’t sign anything without reading it first. Make sure all verbal promises are in writing.
  7. Are you licensed to offer your services in my state?
  8. What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained? Try to use an organization whose counselors are trained by a non-affiliated party.
  9. What assurance do I have that information about me (including my address, phone number, and financial information) will be kept confidential and secure?
  10. How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization? If the answer is yes, consider it a red flag and go elsewhere for help.

Once you have generated a list of potential credit counselors, check to see if there have been any complaints filed against them.  Contact your

Remember, you did not get into this situation overnight.  Take your time and choose a credit counselor that will truly help you change your behavior so you never get into this problem again.