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 and the Consumer Federation of America ( issued a report accusing some agencies of “improper advice and deceptive practices.” So you have to protect yourself.
To begin, the Federal Trade Commission ( 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.