7 Key Rules every
Consumer Should Know
FMI knows that individuals often feel
overwhelmed when they come to a point in life where they must ask for help from
a credit counselor or debt management specialist. Without some specific guidelines
to assist them along the way, many may make poor decisions and, in the long
run, only compound their original financial problems. But what is debt
management, and what does it really involve?
Debt Management, defined
simply, is a process by which debt is eased and eventually reduced through the
managing of consumer assets and direct negotiation with creditors. Debt
management is usually offered by qualified debt "counselors" or a
certified debt management company as is the case with FMI. These debt management
companies use what are called "debt management plans (DMPs)" by which
consumers deposit set funds each month into specific accounts that are then
used by the debt management company to pay off consumer credit card bills,
student loans, medical bills or any other form of unsecured debt.
Choosing a debt
management provider is not something that should be taken lightly. What do you
look for when choosing a credit counselor or debt management firm? There are
dozens of factors to consider, but these 7 key rules to choosing a credit/debt
management firm can make the process less stressful and may get you much closer
to financial comfort faster and easier then you ever thought possible.
- Get a Referral
- Ask someone who has been in a similar situation. Take time to ask
questions, to determine if they had a good experience with a particular
firm or a bad experience. Getting information directly from another
consumer who has used credit counseling or debt management in the past is
an excellent way to learn before you agree to pay for services. In
addition, a reputable company should be willing to provide examples of
good results, without revealing another person's private information.
- National Accreditation - While no specific national or state accreditation will guarantee success, there are organizations in the U.S. with the soul purpose of promoting high standards and ethical practices in the consumer credit industry. The American Association of Debt Management Organizations are one of the most prominent in this industry. Members of this organization specialize in credit counseling, debt management plans, budget/finance industry education and much more.
- Better Business Bureau Membership - Contact the Better Business Bureau in your city or
region and ask for information about the credit counselor or debt
management firm you are considering. You may also want to talk to someone
in the State's Attorney or Attorney General's office to see if the company
has been the subject of any regulatory action. Finally, if the firm in
question has a website, check to ensure it's a member of the www.bbbonline.org online arm of the BBB and
has been awarded its coveted "Reliability Program Online Seal"
View our BBB
online certification here.
- For Profit vs. Non-Profit Experience - Many consumers have a misunderstanding about
Not-For-Profit debt management companies vs. For-Profit companies. They
both offer concessions for the consumer whereas some states require
non-profit status before the company can do business in the state. Credit
card companies fund most Not-For-Profit credit counseling companies with
Grants and Fairshare deductions as a way for them to recover money from
consumers who are currently not making their payments. The biggest difference
is that a Not-For-Profit does not pay taxes whereas a For Profit does.
Study the company carefully to see if it uses "non-profit"
status simply as a marketing tool. In addition, you should select a firm
that has been in business for a number of years, such as FMI, so that
they have a track record you can see.
- A Written Plan
- A reputable credit counseling firm or debt management company will take
time to review your situation, help you with budgeting and money
management, and put your individual plan in writing. This personalized
plan should include details on how creditors will be paid, as well as
realistic goals for returning you to full financial health. Some firms
even offer a free debt comparison quote
which is an excellent way to see how much money you can save, what your
new interest rate may be and how long it will take you to get debt free on
your debt consolidation program right out of the gate. Unrealistic
promises should not be part of the plan. For example, a debt management or
credit-counseling firm does not have the authority to change your credit
report nor should it ever imply it has done so in the past.
Before taking these
above few key steps toward resolving credit or debt troubles, look closely at
your current budget to determine if you can pay a bit more than the minimum on
your debt. If so, you may be able to rebuild your credit or handle your debt
situation privately without the assistance of an outside counselor. If this is
not possible, it may be time to call in professional help.
Coming face-to-face with
financial trouble may seem to be more than you can handle, at first blush.
Fortunately, there are many reputable credit counselors and debt management companies out there who can help get
you started again in the right direction. Following these 7 simple guidelines
when choosing a firm will go a long way in ensuring you final choice is also
the best choice for your current financial circumstances.
Thanks for visiting FMI
today. Please contact us today for more information on our
programs. Take control of your finances today, we can help!
