An established consumer credit counseling agency will assist you to setup a repayment program using your creditors and teach you better money management strategies to avoid debt down the road. However, many credit guidance services take advantage of people who tend to be financially vulnerable, so proceed cautiously.

The Federal Trade Commission Act forbids “unfair or deceptive acts or practices” of credit restoration, debt settlement or counseling agencies. Some states have laws that make it illegal for credit service organizations to assert to be able to improve credit scoring.

And in some states, credit counseling services must register with the state Attorney General’s office and get a surety bond to do business.

Voluntary Certification and Accreditation

The National Foundation for Credit Counseling (NFCC) is an independent not-for-profit organization that creates voluntary benchmarks for credit counseling agencies. The NFCC Council on Accreditation (COA) accredits over 4,000 credit advice programs that meet NFCC standards.

For being accredited by the NFCC, a credit counseling agency should be accepted as non-profit by the IRS and possess the proper local business licenses. To earn NFCC certification, a consumer credit counseling program also needs to use adequate constraints to guard consumers, including:

• Auditing operating and trust accounts every year
• Offering consumer education programs
• Providing detailed reviews of consumers’ income and debts, and an assessment of how each consumer got into financial trouble, with a written action plan for reducing debt
• Disbursing funds to creditors at least twice a month, or sooner in emergencies
• Giving clients a financial statement at least once every three months

The Association of Independent Consumer Credit Counseling Agencies (AICCCA) is another national organization with similar standards.

You might want to consider before joining a credit advice agency that doesn’t fit in with either of these voluntary organizations.

Warning Signs

What should tip you off that you may be dealing with a less-than-reputable program?

Be cautious about illegal fees, sometimes disguised as contributions. If your setup fees or monthly charges are extremely high, they can wipe out any gain you might have made against reduced finance charges, and you would bebetter off negotiating directly with your creditors.

Another warning sign may be outrageous statements to instantly repair your consumer credit rating. Credit rebuilding is a gradual process, and it is illegal to attempt to change your credit score by constructing a fresh, false identity.

It’s also sensible to beware of advance fee loan scams, where you’re asked to fork over money to obtain a promised loan. Under the FTC’s Telemarketing Sales Rule, no person can legitimately ask that you pay until you actually receive a loan or credit. So be skeptical of any consolidation loan, get every detail on paper, and don’t give your bank card, bank account or Social Security information on the telephone or online.

Educate Yourself

The obvious way to protect yourself against unscrupulous credit counselors is to:

• Check out the program’s reputation with your state Attorney General and local Better Business Bureau, and find out how long they’ve been in business
• Confirm with your creditors ahead of time that they will work with that particular company
• Understand exactly what services are offered, and whether those services address all of your debts
• Get the specifics of any monthly fees, and find out whether you’ll still be obligated to pay those fees whether or not you continue to participate in the program
• Get all promises in writing
• Read your written agreement carefully

For help with an Athens GA chapter 13 bankruptcy , contact an Athens bankruptcy lawyer. An Athens Georgia bankruptcy lawyer could give you the help you need.