The person who is quick to borrow money is slow to pay it back. There’s no shame in being in debt. It’s hard to get through life without amassing debt. The only shame is doing nothing to correct the situation. That’s why many people consult with a credit counseling service.

A credit counseling service helps debt-ridden people become more financially literate, learn how budget and dodge bankruptcy.

They try to help people learn to stop living paycheck-to-paycheck and plan for their financial futures.

A credit counseling service can help eradicate the debtor mindset that you can’t get through life without unmanageable debt.

Over 60% of Americans amassed credit card debt within the previous year. Another 37% carried over debt monthly instead of paying bills in full. The average American is saddled with debts totaling $90,500. The use of unmanageable debt as a finance tool is as American as apple pie.

A credit counseling service is free or low-cost, can be conducted online, over-the-phone, or in person.

It can be an invaluable resource that helps you become financially literate over time.

That is, if you solicit the counsel of a legitimate service.

There are many credit counseling services that are just blatant scams.

The staff may be incompetent.

Those seeking services can be charged outrageously high fees, even though they are seeking help because they have no money.

Or, scam services will try to get people to pay for useless extra services.

If you’ve been scammed by a credit counseling service, you have several ways of officially complaining.

I think it would be wise to explain a credit counseling service first.

1-in-4 Americans, or 56 million people, would refer to a credit counseling service if they knew of them or where to find one.

What is a Credit Counseling Service?

Credit counseling is usually a non-profit, free to low-cost financial education service.

They help people learn to how to independently and responsibly maintain their personal finances.

When you contact a credit counseling service, a professionally certified credit counselor will schedule a consultation to personally assess your needs.

Credit counseling consultation sessions can be conducted in-person in an office or conducted online or via phone.

A certified credit counselor should have a degree in economics, financing, or accounting. They should also have certification credentials like a Debt Settlement Specialist Certification or an Accredited Financial Counselor Certification. Don’t be afraid to ask for credentials.

What Happens During a Credit Service Consultation?

One-on-one credit counseling consultations last about 30 minutes to an hour.

The first session is basically a meeting for the credit counselor to assess your needs and help you develop a personalized plan to solve your debt problems.

The credit counselor may ask you to present your pay stubs, rent receipt, bills, list of expenses, and so on.

They want to get an idea of your income, expenses, bills and budgeting needs and wants.

A good credit counselor helps you understand what is getting lost in translation if you’re having personal finances problems.

During credit counseling, you may be encouraged to develop a:

  • Personalized budget
  • Asset and savings profile
  • Emergency fund
  • Retirement fund
  • Bill repayment plan
  • Savings account
  • Creditor negotiation strategy

A credit counselor will encourage you to get a copy of your credit score, or even help you access it.

Credit counselors will schedule free follow-up or low-cost sessions as needed to help you overcome debt problems.

They should also offer you free financial education materials and/or financial literacy workshops and seminars.

If you do pay for a for-profit credit counseling service, you shouldn’t pay more than $5 to $50 a month. You may also be asked for a donation instead. Still, there are too many free services for you to want to pay. You need financial counselling. Don’t get into more debt to get out of it.

As your counseling sessions progress, your credit counselor may refer you to outside services to help you develop a, “debt management plan.”

You should never feel pressured to take part in a debt management plan, as they charge for services.

How Do Non-Profit Credit Counseling Services Make Money?

Legitimate credit counseling services offer their services free or at low-cost.

They make money by collecting commission fees for referring to you affiliate services offer advanced services for a fee.
A debt management plan is a service where a company negotiates with your creditors to reduce your debt and/or interest rate.

You may pay an affordable monthly fee.

Or, you may a commission percentage commensurate to the money saved via the service.

Don’t ever feel coerced or pressured into applying for such services, even if you’re referred by a legitimate credit counselor.

Filing a Complaint About Credit Counseling Service

If you’re being aggressively pressured to pay money for counseling, a workshop, books, or any service connected to the service, it might be a scam.

If you realize you know more about personal finance practices than your counselor, it’s a scam. It may be a scam artist posing as a counselor and looking to collect a commission for directing people to for-profit services.

File a complaint with:

The Consumer Financial Protection Bureau

U.S. Department of Justice

You can also file a compliant with your local better business bureau or politician’s offices as well.

Your local police agency is also another option, but they will probably refer you to an agency who processes such complaints.

The wheels of justice turn slow, so you shouldn’t expect instant results.

You may be able to get faster results if you file a local public petition and seek others who were similarly wronged to participate.

Where to Find Legitimate a Credit Counseling Service?

You can find directories for legitimate services on your local state attorney general and consumer advocacy websites.

Local credit unions, houses of worship, and nonprofit agencies will also be able to refer you.

Ask if services are accredited by agencies like Financial Counseling Association of America or the National Foundation for Credit Counseling.

Make sure the service in licensed in your state, its counselors are certified, and has been in business for several years.

There is no shame in being in debt.

It’s shameful to be scammed into accruing more debt to get out it.

Knowledge is power.

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