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Credit Counseling Agencies are agencies that help debtors work with creditors to arrange a repayment plan as a means of reducing their debt without filing for bankruptcy. Creditors trying to recoup their money are both the primary financier and beneficiary of these counseling services.
Credit counseling services can help you control your debt more effectively and teach you how to manage your money and help you create a debt repayment plan. There are both nonprofit and for-profit debt counseling services here in Maryland as well as national organizations that can provide you with advice.
In Maryland, Credit Counseling Agencies are regulated by the Commissioner of Financial Regulation, empowered by the Maryland Debt Management Services Act. Read the Law: MD Code Financial Institutions § 12-901 et. seq.
Credit Counseling Agencies are primarily funded by “fair share” payments made by creditors from the monies, which are collected through Debt Management Plans. Most Credit Counseling Agencies also ask the debtor for a donation to cover some of the costs and approximately 25% actually charge clients fees for the debt management service.
Consutation fees cannot be more than $50. Monthly maintenance fees cannot exceed $8 for each creditor of a consumer up to $40 per month. Read the Law: MD Code Financial Institutions § 12-918
The National Foundation for Credit Counseling provides a crisis hotline, 1-800-388-2227, on-line counseling, and lists services in your area. Its website offers tips for how to choose a counselor and manage your finances, and tools for analyzing your situation. Organizations that are members of the Foundation must be non-profits. You can also try find a Maryland agency that is a member of the National Foundation for Credit Counseling.
You need to bring your pay stubs, loan information (including the contact information for your creditors) and credit-card statements. You may also need to fill out a budget form that provides information of where you are spending your money so your counselor has a clear picture of your financial situation.
Typically the credit-counseling agency will create a debt-management plan and help you get it approved by your creditors. Once your creditors have approved your plan, most of them will stop charging you additional interest and work with you to reduce your credit.
Monthly maintenance fees should not exceed $40 per month
There should not be charge for credit repair
Read the Law: MD Code Financial Institutions § 12-918
If you are unsatisfied with the service provided by your credit counseling agency you can transfer to a new one by setting up a new debt management plan. It is important that you notify your creditors that you are switching credit counselors and that you need their approval of the new debt management plan.
The Maryland Division of Financial Regulation is the primary regulator for consumer credit counseling agencies. The Division provides a forum for the resolution of consumer complaints concerning questionable credit practices involving businesses that it regulates, and also participates in consumer education and community outreach programs.
The Commissioner of Financial Regulations investigates complaints involving credit-counseling agencies. Complaints serviced by the Commissioner's office are from Maryland residents only. A complaint must be in writing, and must include the complainant's name, address and telephone number and a brief but accurate explanation of the problem and advise us of your desired result. Also include any documentation to support your complaint that will help the agency to more quickly resolve the complaint, but please do not send original documents only send copies. Complaints usually take about 30 days to resolve.
Commissioner of Financial Regulations
500 North Calvert Street, Room 402
Baltimore, Maryland 21202.
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