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Debt Management Credit Counseling

Debt Management

What is debt management credit counseling?

Debt management credit counseling, a commercial debt management solution, is a thriving industry in the United States and responsible for a large number of complaints to the Federal Trade Commission.

Credit counseling is a tempting option for anyone struggling to control their debts, stick to a workable budget or agree a payment plan with their creditors. The original aim of credit counseling organizations was to assist consumers in making sound financial decisions about dealing with their debt and to help with negotiating a repayment plan, often with reduced interest rates, with creditors. However, the possibility of making a quick buck was too tempting for some and soon a host of cowboy credit counselors appeared to give the industry a bad name. Many enrolled clients on non-existent debt management plans and took off with the payments themselves.

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At its best debt management credit counseling offers consumers a chance to learn about financial management through sessions that teach budgeting skills, prepare the client to deal more efficiently with their current debt and prevent them falling into the same financial hole again. Counselors also take an overview of the client's financial position and advise him or her on the best way to manage their debt. Our page on what to expect from your debt management service gives a run down of the services offered by these companies.

Finding a reputable debt management credit counseling service can be time consuming. However, it is one of the most important steps towards dealing with your debt. When you're in a financial predicament the last thing you want to do is be shafted by a con artist masquerading as your financial saviour. For tips on how to find a trustworthy company check out our page on choosing a debt management company.

Two national associations aim to set quality standards for the credit counseling industry. The National Foundation for Credit Counseling (NFCC; click here) was founded in 1951 and is the United States ' largest and oldest national non profit credit counseling group. The NFCC has 150 member agencies and more than 1300 offices. The group aims to set national standards for credit counseling, debt reductions services and financial literacy. NFCC members are also known as Consumer Credit Counseling Services (CCCS). They charge roughly $19 for enrollment and an average monthly fee of $12 for clients on debt management plans.

The Association of Independent Consumer Credit Counseling Agencies (AICCCA), a national membership organization, is dedicated to improving standards of debt counseling services . You can search AICCCA's website (click here) for accredited debt management groups. Accredited counseling services commit to a cap on their fees, regulations on the speed of payments to creditors, regular counseling services for clients and a responsive complaints procedure. The cap on enrollment fees for debt management plans is $75; monthly fees are capped at $50. however, many of their members charge fees substantially below these levels.

Although membership of these associations alone does not guarantee the integrity of a credit counseling service, it goes a long way to ensuring that organizations adhere to the stringent set of standards established by the umbrella organization. Before employing any credit counselling agency you should look for an independent review of their services. See our page on debt management groups to find out where you can get this.