Consumer Credit Counseling Agencies

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Consumer Credit Counseling Agencies

A consumer credit counseling agency is a nonprofit organization established to help consumers pay off their debts and stabilize their finances. A consumer credit counseling agency also can provide an alternative to bankruptcy, and sometimes assist with financial planning.

What the agencies do

The agency serves as a liaison between the consumer, who is in financial difficulty, and the consumer’s creditors. Those seeking assistance come from all walks of life; the only thing they have in common is poor money management habits. Agency counselors and educational programs can also show consumers where they’ve gone off track and how to get back.

How they are funded

While consumer credit counseling agencies usually charge modest fees to consumers who use their services, the agencies’ major source of funding is creditors, who often return a small percentage of the money collected to the agencies for their continued operation. Some agencies also receive funding from organizations such as United Way and federal agencies such as the Department of Housing and Urban Development.

Keep in mind, however, that there are a number of for-profit businesses that promise to fix your credit, but historically the services they offer have failed to justify the higher fees they charged.

For more information

For information on a nonprofit credit agency in your area, contact the National Foundation for Credit Counseling (www.nfcc.org or 800-388-2227).