Trusting Credit Counselors

I am currently filling out an application form for a [credit counseling] agency that wants several hundred dollars up front and 14 monthly payments. I was also told that [some agencies] are fronts for the creditors. How do I know which agency to trust?
–Via the Internet

You’re right–there are many unscrupulous credit counseling agencies. Most recently, the National Consumer Law Center (www .consumerlaw.org) and the Consumer Federation of America (www.consumerfed.org) issued a report accusing some agencies of “improper advice and deceptive practices.” So you have to protect yourself.
To begin, the Federal Trade Commission (www.ftc.gov/bcp/conline/pubs/credit/ fiscal.htm) recommends that you ask agencies the following questions:

What services do you offer? The organization should offer a wide range of services including debt and savings management classes and budget counseling.

What are your fees? Get a complete list of fees, including the initial, application, and maintenance fees. If the company doesn’t offer one in writing, don’t sign up.

What if I can’t afford to pay your fees or make contributions? Reputable organizations will make every attempt to work out a plan to fit your lifestyle.

• In addition, avoid companies that:
• guarantee they can remove unsecured debt;
• require substantial monthly service fees;
• tell you to stop making payments to or communicating with your creditors;
• promise that using their system will have no negative impact on your credit report.