a)How are payments distributed to your creditors
Your creditors should always be credited with 100% of the amount you pay through a debt consolidation agency. With unscrupulous firms, the money gets eaten away by extra fees.
b) Where does the agency get funding?
Most credit counseling agencies are partially funded through voluntary contributions from creditors who participate in Debt Management Plans. Avoid credit counseling agencies that refuse to discuss funding sources.
If the agency claims to be tax-exempt or not-for-profit, double-check with your state charity official. It is illegal for a company to represent itself as a non-profit when that is not the case.
c) Do they offer budget and credit education?
Reputable organizations are willing to help you manage your finances through counseling and education. Ask if the agency offers workshops or educational materials. Are they available for free? Are they accessible online or can the materials be mailed to you?
If the agency insists that a debt management plan is the only option for clients, look elsewhere. Creating and maintaining a budget should be a primary tool of the agency.