Debt or Credit Counselor - Asking The Right Questions

[jeffrey]

By Mike Killian, CardRatings.com

You have decided you could probably use debt counseling. Who do you turn to? Perhaps XYZ company was good for your Aunt Milly. Recommendations from a trusted source are always a key ingredient to wading through the myriad of resources available. But what if there is no Aunt Milly? We all know some agencies can be less than scrupulous. So, how do you determine your best choice in debt counseling? You not only ask questions. You ask the RIGHT questions.




There is so much discussion these days concerning for-profit versus non-profit debt counseling that a Senate tax bill is currently discussing eliminating the distinction. In fact, many non-profit agencies are about as non-profit as Donald Trump! So, perhaps the key factor to consider is accreditation by national sources.

I caught up with Jim Young CEO of Accelerated Debt Consolidation, Inc and asked him about accreditation.

While accreditation is not a bad thing it in no way qualifies debt management companies to do what is crucial in servicing clients. There are standards for accounting practices that can be helpful, general organizational policies and procedures that can be an asset to any organization but they do not address industry specific issues such as the processing of proposals. In my estimation the processing of proposals is the single most important function.

I then asked about credit counselor certification.

The counselor certification course often covers no procedures for actually counseling clients and handling proposals. Such a course should be covering the various differences between the policies and requirements of the major creditors, proper preparation before the DMP [Debt Management Program] begins and which accounts should be included in the DMP. The course is normally more about the rights of clients under laws against such things as collection activities, disputing erroneous info. on credit reports, etc. It in no way addresses the day to day knowledge required to properly counsel clients on the various ins and outs of dealing with various creditors that they may be included in their consolidation.

Jim then made a very strong point when summarizing the above comments.

Accreditation is not a bad thing but in no way assures good service. Counselor certification is not a bad thing but in no way assures good service. Association membership is not a bad thing but in no way assures good service. Non-profit is not a bad thing but in no way assures good service.

So the obvious question to Jim was, "If non-profit status, accreditation, certification, and other issues touted by so many debt counseling agencies are not key issues, what questions should the prospective client be asking?"

Consumers need to be asking such things as: What is your retention rate? What is your BBB report? How do you process proposals? Do you have electronic proposal and payment capabilities?

A very large firm in Houston Texas has all of the so called 'window dressing' I mentioned before and they have 50 complaints with the BBB. Another firm in Boca Raton Florida has all the same 'window dressing' and they have 64 complaints with the BBB.

Accelerated Debt Consolidation, Inc, on the other hand, has had an unparalleled 2 complaints in 4 years and maintains an 81% retention rate... these are results a client can take to the bank.

The bottom line is to really do your homework before jumping on the debt/credit counseling bandwagon. As always, consumers should adopt a "buyer beware" mentality, especially when dealing with companies in this industry.