Questions to Ask a Credit Counselor
For anyone behind on credit cards or other unsecured debt who is about to sit down, in person or by phone, with a nonprofit credit counseling agency and has agreed to nothing yet. The questions run in the order a first session tends to go: the agency itself, your options, how a debt management plan works, fees, your credit, and what ends up on paper. Fee limits, licensing and credit reporting differ by state and country, so where a note says how something commonly works, ask how it works where you live.
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The questions
Each question, and why to ask it
The agency
Is this agency a nonprofit, and which outside body accredits it?
Why ask it
Nonprofit is a tax status, not a promise that the advice is free or impartial, so get the accreditor's name and look the agency up on that body's own website afterward. In the United States, two national trade groups, the National Foundation for Credit Counseling and the Financial Counseling Association of America, each publish a list of member agencies. Elsewhere, ask which regulator or association oversees debt advice in your country.
Are you licensed or registered to arrange debt management plans where I live?
Why ask it
Whether a license is needed, and from whom, depends on your state or country, and an agency working by phone from somewhere else still has to meet the rules where you are. Take down the license number and the office that issued it, then confirm it with that office yourself.
Is today's session free, and am I under any obligation at the end of it?
Why ask it
A first budget review often costs nothing, though that is the agency's choice and not a rule, so ask before you start. The second half of the question matters more: you should be able to hear the advice, go home and call back next week to find the same terms waiting.
How are you paid, and does your pay change if I sign up for a plan?
Why ask it
A salary that stays the same whatever you choose is the answer to hope for. Commission, bonuses or enrollment targets do not make the advice wrong, but they are a reason to check it against a second agency before acting on it.
What does the agency offer besides debt management plans?
Why ask it
A counseling agency should have more than one thing on the shelf: a budget session, money classes, and often housing or student loan counseling. Find out which of those are free and which you could use without enrolling in anything. If the list stops at the plan, you have reached an enrollment desk, and a second agency is worth an hour of your time.
What training or certification do you hold as a counselor, and who issued it?
Why ask it
Here you are asking about the person on the line, not the agency. A certified counselor can name the program and the body behind it without hesitating; someone hired to take enrollment calls usually cannot. If the answer is thin, ask whether a certified counselor can review your budget before you decide anything.
Where does the agency's funding come from?
Why ask it
Expect to hear some mix of client fees, grants and contributions from the creditors who are repaid through plans. Creditor money is ordinary in this field and worth knowing about, because it explains why a plan is the product most agencies know best. Follow up by asking when the counselor last advised someone against one.
Of the people you counsel, roughly what share go onto a plan and what share leave with other advice?
Why ask it
No exact figure is needed. What matters is whether plenty of people leave with a budget, a referral or a suggestion to call their lenders, because an agency that enrolls nearly everyone it speaks to is selling, not counseling.
Where can I check complaints against the agency, and is there anything on record you would like to explain?
Why ask it
A sound agency points you to the regulator or consumer office that keeps the records and is not rattled by being asked. Do the checking after the call, and read what the complaints were about: slow replies are one thing, payments that never reached creditors are another.
Who will see my financial details, and are they ever passed or sold to lenders or other companies?
Why ask it
You are about to hand over your income, your account numbers and a list of everyone you owe. The privacy policy should be available in writing, and it should say what happens to your file if you never enroll. Where details are passed to loan or settlement companies, their calls will follow, so it is better to know now.
Your options
Looking at my income, bills and debts, what are my realistic options?
Why ask it
This is the heart of the session, and the answer should hold more than one route, with the drawbacks of each. If the only thing described is the agency's own plan, ask what the counselor would suggest if plans did not exist.
Which of my bills have to be paid first, and which can wait?
Why ask it
Counselors usually put housing, utilities, a car you need for work and court-ordered payments ahead of credit cards, whatever a card collector says on the phone. The useful version is your own list, ranked, with what falling behind on each one leads to where you live.
Could I clear this on my own with a tighter budget, and what would that budget look like?
Why ask it
Have them build it with you line by line, from what you spend now and not from what a worksheet says you should. If it frees up enough to pay the cards down in a time you can live with, you may not need a plan, and a counselor worth the title will say so.
Should I call my card issuers and ask for a hardship arrangement myself before enrolling in anything?
Why ask it
Some lenders will lower a rate or a payment for a while if you ask, and trying costs nothing. A counselor can tell you what to request and what the lender is likely to want to know. Write down what each lender offers so you can set it beside the plan's terms for that same account.
Would a consolidation loan or a balance transfer cost me less than a plan?
Why ask it
The answer turns on the rate you could actually get with your credit as it stands, which may be well above the advertised one. Ask for the total cost of each over the same number of months, and for a straight opinion on what happens if the cards fill up again once a loan has cleared them.
How is a debt management plan different from debt settlement, and does the agency offer both?
Why ask it
On a plan you repay the full balance, usually at lower interest. Settlement means offering less, often after payments have stopped, which can bring collections, lawsuits and, in some places, tax on the amount forgiven. An agency that sells both should be able to say why one fits your accounts and not the other, and the tax point belongs with a tax preparer.
At what point would you tell someone in my position to talk to a bankruptcy attorney?
Why ask it
A counselor cannot give legal advice, but can say when the arithmetic stops working: when even reduced payments do not fit the budget. Near that line, hold off enrolling in a plan that day and ask for a route to legal aid or a low-cost consultation. In the United States a session with an approved counseling agency is generally required before a bankruptcy filing, so it is worth knowing whether this agency is on that list.
Some of my accounts are with collectors, and one creditor has threatened to sue. Does that change what you would recommend?
Why ask it
Collection accounts can sometimes go into a plan and sometimes cannot, so go through them by name. Court papers are a separate matter: they carry a deadline that no counselor can answer for you. If any have arrived, say so at the start and ask where to find a lawyer or a legal aid office quickly.
What would the next six months look like if I changed nothing?
Why ask it
Every other option should be measured against this one. A plain walk-through covers the interest, the fees and the point at which accounts tend to be handed to collectors. Set beside the plan, that picture makes the choice clearer, whichever way you go.
Which of my debts can you not help with, such as student loans, taxes, medical bills or a mortgage?
Why ask it
Plans are built mainly around credit cards and similar unsecured accounts. For everything else, ask who does help: a housing counselor, the loan servicer, the tax office's own payment arrangements. Leave with a name or a number for each debt the agency cannot touch.
If you refer me to a lender, a law firm or a settlement company, does the agency receive anything for it?
Why ask it
A payment for the introduction does not make a referral bad, but you should know about it before you dial the number you were given. Ask for two names where you can, so the choice stays yours.
The plan
Which of my accounts would go into the plan, and which would I keep paying on my own?
Why ask it
Get this as a list, account by account. The payments that stay outside the plan still have to come out of the same budget, and a plan payment that looks affordable alone may not be once the car loan and the rent sit beside it.
Which of my creditors already work with your agency, and what happens to an account whose creditor says no?
Why ask it
No creditor is obliged to take part, so the answer may differ for every card you hold. For any that decline, ask whether you would go on paying them directly at the old rate, and whether the plan still makes sense without them.
What interest rate and fee reductions do you expect from each creditor, and are those confirmed or only estimates?
Why ask it
At a first session these are estimates drawn from what each creditor has granted before, and the creditor decides, not the agency. Ask when the real figures arrive and whether you can back out at no cost if they come in worse than quoted.
What would my monthly payment be, and how did you arrive at it?
Why ask it
The sum should be visible: each creditor's share plus the agency's fee. Test it against the budget you built together and see what is left for a car repair or a short month, because a payment that only works when nothing goes wrong will not last the length of a plan.
In which month would the plan end, and what is the total I would have repaid by then?
Why ask it
You need the same two figures for your present course, paying what you pay now at today's rates. The gap between the two totals is what the plan is worth to you, and it is a fairer test than the monthly payment.
Do all my credit cards have to be closed, or can I keep one for work or emergencies?
Why ask it
Closing the accounts that go into a plan is a common condition, set by the creditors as much as by the agency. Whether one card can stay open outside it varies, so ask about your specific card, and ask what you are expected to do in an emergency if the answer is no.
On what date do I pay you, and on what dates do you pay each creditor?
Why ask it
There is usually a gap of some days between your payment leaving and the creditors receiving theirs. If a creditor's due date falls inside that gap, the account can show as late even though you paid on time. Ask for the dates to be lined up, or the due dates moved, before the first payment goes out.
Until every creditor has accepted, should I keep making my usual payments directly?
Why ask it
Settle this before the session ends, and get the answer by email if you can. Proposals take time to be accepted, and a payment skipped in between still counts as missed. Be wary of anyone who tells you to stop paying creditors and send the money to the agency before a plan is in place.
Will the collection calls, late fees and over-limit fees stop, and how soon?
Why ask it
Fees are often waived once a creditor accepts the proposal, and calls tend to ease after the first payments land, but neither is immediate. Until then you need a line for the collector who rings, and to know whether you may refer them to the agency.
What happens if I miss a plan payment or can only send part of it one month?
Why ask it
This is where plans come apart. A creditor can withdraw the lower rate after a missed payment, sometimes after only one. Find out how much warning the agency needs, who you call, and whether a creditor has ever restored the terms for a client who slipped.
Can I pay extra or finish early, and can the payment come down if my income drops?
Why ask it
Paying more should be simple and free of penalty; ask how the extra is split among the creditors. Lowering the payment is harder, since each creditor has to agree again, so ask how long a review takes and what you should send while it is pending.
My spouse and I have joint and separate debts. Would one plan cover both of us, and who signs?
Why ask it
Bring your partner to the session if any account is shared, because a plan built on half the household's numbers will not hold. Ask whether both of you would sign and what becomes of the plan if you later separate. Responsibility for a spouse's debt depends on where you live, so do not assume either way.
Once the plan is running, who do I call with a question, and will it be you?
Why ask it
Many agencies pass enrolled clients from the counselor to a separate service team, which is fine if you know it is coming. Take the direct number and the hours, and check that a fresh budget review with a counselor stays available, since a plan lasts long enough for rent, pay and family to change.
Fees
What are the setup fee and the monthly fee for a plan, in dollars?
Why ask it
Ask for both as amounts of money, not as a percentage of your payment. Many places limit what an agency may charge, so also ask which cap applies where you live and hold the quote up against it.
Is your fee taken out of my monthly payment or added on top of it?
Why ask it
It changes how much of each payment reaches your creditors. If the fee comes out of the payment, check that every creditor still receives the amount it agreed to; if it sits on top, give it a line of its own in the budget.
Do you reduce or waive fees for people who cannot afford them, and how do I ask?
Why ask it
Some agencies do, and not all of them mention it unprompted. Find out what proof of income they want and whether a waiver is looked at again later, so a small raise does not bring a bill you were not expecting.
Are there other charges: for education classes, a credit report, a returned payment, a change to the plan or closing it?
Why ask it
Read the list back and write an amount beside each item. If a voluntary contribution is requested, ask what changes when you decline: where the service or the tone shifts, it is a fee under another name.
Do I pay anything before my creditors have accepted the plan?
Why ask it
A modest setup charge at enrollment is common. A large sum up front, before any creditor has agreed to anything, is a reason to pause and get a quote from a second agency. Ask whether the setup fee comes back to you if the proposals are turned down.
Your credit
How will the plan appear on my credit reports, and for how long?
Why ask it
Creditors may add a remark that the account is being repaid through a counseling agency, and closed accounts will show as closed. How lenders and scoring models read those entries depends on the bureau and the country, so ask what the counselor has seen with your particular creditors and what becomes of the remarks once the plan is complete.
If an account is already behind, will the creditor bring it current once I am on the plan?
Why ask it
Some creditors will treat a past-due account as current after a run of on-time plan payments, which stops new late marks from piling up. That is each creditor's own policy and nothing the agency can promise, so ask which of yours have done it before and after how many payments.
What is likely to happen to my credit score during the first year, and why?
Why ask it
Expect an explanation, not a number. Closing cards can pull a score down at first, while a year of on-time payments and falling balances tends to push the other way. Anyone who promises a specific rise is guessing.
Could being on a plan make it harder to rent an apartment or get a mortgage before it ends?
Why ask it
Lenders and landlords set their own rules, and the counselor can only report what past clients have run into. If a move or a home purchase is on the horizon, say when, and put the same question to a lender directly.
Can I take on any new credit while I am on the plan, for example a car loan if mine gives out?
Why ask it
Agreements often bar new credit for the length of the plan, sometimes with an exception for something like a car you cannot do without. The detail to pin down is where the line sits and what crossing it brings: a warning, or the end of the plan.
When the plan is finished, what will my reports show, and what should I do next to rebuild?
Why ask it
A full answer covers a letter of completion, a check that each account reports a zero balance, and a careful way back into credit without sliding. Ask whether the agency offers a review at the end, since that is when a mistake on a report is easiest to catch.
In writing
Can I take the agreement home and read it before I sign?
Why ask it
Yes is the only acceptable answer. Read it for three things: the fees, what you are promising to do, and how either side can end it. An agency that needs a signature or bank details before the call is over has shown you how it treats clients.
Will you send me the budget and your recommendations in writing, whether or not I enroll?
Why ask it
A written action plan is the real product of a counseling session, and it should be yours even if the advice is to do nothing through the agency. It also gives you something to lay beside a second agency's advice.
Will I see each creditor's acceptance, with the new rate and payment, before my first plan payment?
Why ask it
Until then you are working from estimates. Ask for a copy of each acceptance, or one statement listing them all, and compare the rates with what you were quoted at the session. A creditor missing from that list is one you are still paying yourself.
How will I know my creditors are actually being paid each month?
Why ask it
The agency should send a regular statement of what went to whom. Keep opening your creditors' own statements too and match the two for the first few months. If a payment is missing, call the agency that day and note the name of whoever answers.
Where is my money held between my payment and yours to the creditors, and what protects it if the agency fails?
Why ask it
Listen for a separate client account, a bond or insurance, and an outside audit. What is required differs from place to place, so ask which protections apply to this agency and how you could verify them.
How do I cancel, what would it cost, and what happens to my accounts if I leave?
Why ask it
Leaving is normally allowed at any time, but the creditors' lower rates usually end with the plan. Three details matter: any closing fee, how quickly money in transit is returned, and whether the cards could be reopened or stay closed for good.
Getting real advice from a first credit counseling session
Practical guidance for the conversation itself
Before the session
Put every debt on one page
Write down each creditor, the balance, the interest rate, the minimum payment and whether the account is current, late or with a collector. The counselor will ask for exactly this, and a complete list is what turns a general chat into advice about your accounts.
Add up a real month of spending
Work from bank and card statements, not memory. Budgets built from guesses come out too tight, and a plan payment set on a too-tight budget is the one that gets missed a few months in.
Check the agency before you ring it
Look up its accreditation and any license on the accreditor's or regulator's own site, and search its name next to the word complaints. Ten minutes of this keeps your account numbers away from a company that only borrowed the word nonprofit.
Set your limits for the day
Decide beforehand that you will not give bank details for a payment or sign anything in the first conversation. A rule made at home is much easier to say out loud when the moment comes.
Sort the list into email and voice
Licensing, the fee schedule and a blank copy of the agreement can all be requested in writing before the appointment. That leaves the hour itself for Your options and The plan, where the answers depend on your own budget and the counselor has to reason out loud.
During the session
Budget first, plan second
A counselor who goes through your income and spending before any product is mentioned is doing the job in the right order. If the plan pitch arrives in the first five minutes, steer back to the budget or end the call.
Ask for figures creditor by creditor
Averages across all clients say little about your cards. For each one, get the expected rate, the payment and whether that creditor takes part, and mark which numbers are confirmed and which are estimates.
Raise the other routes yourself
Name the hardship program, the loan, settlement and bankruptcy, and ask what each would mean in your case. How evenly the counselor treats the options the agency earns nothing from is a fair measure of the advice.
Note who said what
Write down the counselor's name, the date and each figure quoted. When the written proposal arrives, you can check it against your notes and not against your memory of a stressful conversation.
Plan, settlement, bankruptcy or none of them
Steady income, mostly card debt
If you can cover living costs and still make one reduced payment every month until the end date, this is the situation plans were designed for. The test is the budget with the payment in it and a little left over.
A budget that already nearly works
Where a few changes free up enough to pay the cards down yourself, a plan adds fees and closed accounts for little gain. Take the written budget, ask your lenders about hardship terms and look at the numbers again in three months.
Tempted to settle for less
Settlement can leave you owing less, but it usually does more harm to credit and carries risks a plan does not, including being sued while you save. Hear it described by someone who does not sell it before you speak to a company that does.
No payment fits, even a reduced one
When the reduced payment still cannot be met, a longer plan will not fix it. That is the point to talk to a bankruptcy attorney or a legal aid office, and to ask the counselor which bills to keep paying in the meantime.
Signs to try a different agency
A plan before a budget
Enrollment offered before anyone has asked what you earn and spend is a sale. Counseling starts with your numbers.
Fees nobody will pin down
If the setup and monthly charges will only be revealed after you sign, or shift during the call, stop there. A legitimate agency can state both in one sentence.
Results promised in advance
No agency controls what a creditor accepts or what a score does. Promises of a set rate, a set number of points or debts wiped out belong to a different kind of company.
Told to stop paying your creditors
Sending money to the agency while the accounts go unpaid, before any creditor has agreed to a plan, is how people end up further behind. Ask for that instruction by email and see whether it ever arrives.
A decision wanted on the call
Your debts will be much the same size next week. An agency that cannot wait while you read the agreement and speak to a second one is not working to your timetable.