A Look at Credit Counseling Fees
Credit counseling fees operate as profit and non-profit and vary in fees, services and quality. Many non-profit credit counselors offer free budgeting and debt courses. Learn how credit counseling agencies negotiate a “fair share” percentage fee to manage and collect debt.
Credit counseling agencies fees vary for financial education courses and debt management services. Credit counseling agencies typically charge debt management setup and maintenance fees also.
It is important to note many States do not regulate or licensed credit counseling agencies. Did you know non-profit credit counseling agencies are exempt from many State laws regulating financial service companies? Always fully investigate a credit counseling agency before paying any fees or providing sensitive personal information.
How Credit Counseling Fees are Paid
Credit counseling agencies typically paid both by their clients and the creditors. Credit counseling clients generally pay a fee to have a debt repayment plan setup and in many cases a monthly maintenance fee is charged as well.
Percentage Fee – “Fair Share”
Credit counseling services may charge debt repayment plan creditors a percentage fee which is included in the debt repayment plans. This negotiated percentage is known as a “fair share” and can be as much as 15%.
Credit Counseling Late Fees and Interest Rates
Credit counseling agencies will raise fees and interest rates if you you’re your payments or are late with your payments.
Fees for Education and Training Services
Credit counseling agencies offer and charge fees for education in the form of classes and one-on-one confidential budgeting, mandated online bankruptcy counseling, credit report reviews, identity theft counseling, student loan repayment counseling, foreclosure and reverse mortgage counseling.
Non-Profit Required Contributions or Donations
Many non-profits credit counseling agencies also charge a fees in the form of donations for many of the credit counseling services. Non-profit credit counseling agencies claim these fees are voluntary and are tax-deductible.
Less reputable non-profits credit counseling agencies will require you to disclose your entire financial situation before disclosing how much the fee will be. These credit counseling agencies are prescreening potential clients to determine how much contribution they would be required to pay before offering solutions to repay your debts. In addition they are determining if they are able to sell a debt management plan with setup and maintenance fees.
You can always inquire with credit counseling agencies upfront regarding disclosure of fees, especially for debt management services.
Debt Management Setup and Maintenance Fees
Those who use a credit counseling agency to setup a debt management plan will pay a setup fee to the agency and a monthly maintenance fee. Debt management setup fees and maintenance fees are main sources of income for credit counseling agencies and can be very lucrative. Properly researching and shopping for a credit agency with competitive and attractive rates for debt management services will help you get out of debt faster.
A List of Types of Credit Counseling Fees
Debt Management Plan Setup Fees
Monthly Maintenance Fee for Active Debt Management Plans
Debt and Budget Counseling Session Fees
Foreclosure and Reverse Mortgage Counseling Fees
Identity Theft Counseling Session Fees
Student Loan Repayment Counseling Session Fees
Bankruptcy Filing Fees
Bankruptcy Pre-Filing Counseling Education Requirement Fees
Bankruptcy Pre-Discharge Education Requirement Fees
Typical Credit Counseling Course Fees
Mandated Bankruptcy Creditor Education
Online Credit Counseling Course – $25/$50 per individual or couple for certificate
Many non-profit credit counseling agencies will provide the course at “no cost” or free although charge $25 for the certificate.
Bankruptcy Pre-Discharge Education Course in Person – $40/$75
Bankruptcy Pre-Discharge Education Course Online – $25/$75
Reverse Mortgage Counseling Session – $50/125+
Free Credit Counseling Services
There are many free Counseling Sessions and Courses offered by non-profit credit counseling agencies. Be caution on providing any sensitive personal information to credit counseling agencies if you are only planning on taking a free counseling and budgeting session. Many free courses are offered by credit counseling agencies with the expectation of selling additional fee-based services.
A List of Free Credit Counseling Services
Online Budget and Debt Courses
One-on-One Budget and Debt Counseling Session
Foreclosure Prevention Counseling Session
Identity Theft Counseling Session
Credit Report Review
