A Texas resident who is deep in debt is often desperately seeking relief. While filing for bankruptcy is a fairly common option, not many people know alternatives to bankruptcy exist. In such situations, the first alternative step is to identify a credit counseling agency. It is important that a debtor makes the right choice when finalizing a credit counseling organization because an error in judgment can prove costly and have many long-term consequences.
In many cases, people turn to their financial institution, the local consumer protection agency and even family and friends for informal advice and many times this proves effective. Additionally, branches of the U.S. Cooperative Extension Service, a number of non-profit credit counseling programs run by credit unions, universities, housing authorities and military bases can also provide assistance. However, it is important to remember that "non-profit" does not mean free, affordable or, at times, even legitimate.
A credit counseling agency's role is to advise a debtor about how to manage available income and assets to address the financial difficulties being faced. The agency's counselors are trained in consumer credit, debt management and budgeting. Their jobs involve understanding a debtor's financial problems and helping develop a plan to resolve those problems.
Usually a reputable credit counseling agency provides free information about itself and the services it offers without asking for details about a debtor's financial situation. The initial meeting usually lasts an hour and the agency may offer additional sessions, if necessary. However, if the initial approach is otherwise, a debtor should seriously consider stepping away from that agency.
Once a debtor is comfortable with the credit counseling agency's credibility, the person should validate that agency's reputation with the nearby consumer protection agency and the Texas Attorney General's Office to confirm whether past complaints about the agency's services were filed. A debtor may also consult the list of credit counseling agencies approved by the U.S. Bankruptcy Trustee Program for providing pre-bankruptcy counseling.
Source: Consumer.FTC.gov, "Choosing a Credit Counseling Organization," Accessed on Jan. 30, 2015