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Getting Out of Debt

Quality Credit Counseling

Use our checklist to find a reputable agency.

A good credit counseling agency can help you set a budget, negotiate with creditors and dig out of debt. But some agencies are much better than others -- as you've probably noticed from the questionable credit-repair spam that fills your e-mailbox. The following steps can help you find a reputable credit-counseling agency that can really improve your financial situation:

  • Search for credit-counseling agencies that are members of one of the two major trade associations: the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies, which maintain standards for agency accreditation and training requirements for credit counselors. Their Web sites also include helpful information about getting out of debt.

  • See if the agency has been approved by the U.S. Trustee's office (part of the Department of Justice) to offer credit counseling for people who want to file for bankruptcy. Even if your debt problems aren't that serious, this list can help you find agencies that have made it through a second level of vetting. Check out the approved agency list, which includes links to agencies that have made the cut (currently 132 firms, with more on the way), their contact information, and whether they do business in person, over the phone or through the Internet.

  • Find out what type of plan an agency will give you. A good credit-counseling agency should meet with you for 60 to 90 minutes, review your financial situation and offer budgeting advice before doing any kind of credit repair.

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  • Beware of agencies that pressure you to sign up for a debt-management program, in which you pay all of your bills to the agency, which in turn pays your creditors. Although these programs can help some people, they aren't always the best solution. Some agencies focus on these programs because they're paid by creditors to sign up people. "The primary service we provide to most people is budgeting and credit counseling, and most people don't end up in a debt-repayment plan," says Suzanne Boas, president of Consumer Credit Counseling of Greater Atlanta, one of the first agencies approved by the U.S. Trustee's program.

  • Ask for costs in writing. A good agency should charge about $50 or less; budget counseling sessions generally cost less than $20.

  • See the Federal Trade Commission's advice on choosing a credit counselor, which includes helpful information and a list of questions to ask before signing up for a plan. If you're wondering whether an agency is on the up and up, type its name into the search engine on the FTC's home page and see if it has ever been charged with deception or misrepresentation.

  • For more advice on getting out of debt, see Lighten Your Debt Load.