U.S. consumer debt currently exceeds $11 trillion, according to Debt.org. If you are struggling to manage your own debt, hiring a nonprofit debt relief counselor can help you lower your monthly payments. Choosing the right nonprofit organization to tame your debt can be a challenge, but discovering ways to locate credible credit counselors in your area can help you save time and money.
One of the safest resources available online to locate a trustworthy and qualified debt counselor is through the U.S. Department of Justice, which has established a list of qualified nonprofit credit counseling organizations that are approved pursuant to Title 11 of the U.S. Code to protect those who need debt relief. This list is available to view and download. The website provides options to organize the credit counselors by language and location.
Certified Consumer Credit Counselors
Another way of protecting yourself against frauds or unqualified credit counseling is to seek counselors who are certified in credit counseling or financial planning. A 2005 report by a Senate investigating committee found that the National Foundation for Credit Counseling was committed to ethical counseling and stated that "if applied throughout the industry, these [NFCC] professional standards could significantly address the abusive practices identified in this report." The NFCC offers the Certified Consumer Credit Counselor designation for nonprofit organizations that are seeking accreditation from a national body. To become a member of the NFCC, a counseling agency must report its annual audits by an independent certified public accountant and must provide action plans and quarterly company reports to clients.
The Better Business Bureau is an organization that rates companies from "A+" to "F" based on customer satisfaction and filed claims against businesses and nonprofit organizations. In 2010, BBB reported receiving more than 3,500 complaints from all 50 states against fraudulent debt settlement companies. Such complaints have ranged from high upfront fees to broken promises and debt creation instead of elimination. Comparing local nonprofits based on their BBB ranking can provide further information on their reliability.
Debt Relief Scams
Alice Hrdy, an attorney with the Federal Trade Commission, in 2007 said the FTC had sued more than a dozen debt relief companies over several prior years. Both the FTC and Internal Revenue Service have uncovered companies that are misrepresenting themselves as nonprofits or misguiding the public about their charges. Travis Plunkett, then-legislative director of the Consumer Federation of America, warned Americans in 2007 on MSNBC not to trust any agency that suggests it can lower your principal by 50 or 70 percent, a claim he said was "virtually impossible under any circumstance." In response to complaints made to the IRS, FTC and BBB regarding debt settlement companies, Consumer Counseling Northwest and the CFA are recommend that Americans seeking debt relief use a reputable credit counseling agency.
- Debt.org: Americans in Debt
- Cornell University Law School: 11 USC § 111 - Nonprofit budget and credit counseling agencies; financial management instructional courses
- U.S. Department of Justice: Approved Credit Counseling Agencies
- Better Business Bureau: Complaints to BBB Against Debt Settlement Companies On the Rise
- MSNBC: Debt Relief Deals "Preying on Consumer's Trust"
Nicole Manuel is a finance and economics writer with a degree in economics and more than six years of professional writing experience. She is also a Certified Professional Coach (CPC) known as The Personal Eco-nomist, who specializes in helping people live healthy, abundant lives on a budget.