Q: I am trying to get a handle on my debts. How can I find a reputable nonprofit credit-counseling agency to help me develop a plan and maybe consolidate all my debts?
J.L., via e-mail
A: Plenty of credit counselors are available, but tread carefully. A 2003 survey by the National Consumer Law Center and Consumer Federation of America charged that many counselors were charging a lot of money to dish out little useful advice. Credit-counseling agencies trumpet their nonprofit status, but don't let that lull you into a sense of security. They can make a lot of money - from you.
One way to sort out the helpful from the harmful is fees. They should range from zero to maybe $25-$30 a month. And there shouldn't be any steep setup fee should the agency develop what is commonly called a debt-management plan to get your expenses under control. The survey authors also suggest watching out for:
• Agencies that tout "saving" money for you or dangle the possibility of arranging a loan to bail you out.
• Commissioned helpers. Staffers at true nonprofit should by paid by the hour, not from fees they collect from selling you help.
• Too little time. If a counselor cooks up a debt-management plan for you inside 20 minutes, he or she probably hasn't explored all the options.
There are two trade groups that license many credit-counseling agencies: the National Foundation for Credit Counseling (800-388-2227, or www.nfcc.org) and the Association of Independent Consumer Credit Counseling Agencies (800-450-1794). Both have look-up services that will locate one of their members near you. And both have codes of ethics that are supposed to keep licensees in line and above board.
As you sort through these agencies, check on whether they have complaints by contacting the Better Business Bureau and the state attorney general where the business is located.
Q: I spoke with a financial planner a few years ago who asked for my Social Security number as well as my bank account number. How do I know if I can trust someone with this kind of information?
S.R., Hyannis, Mass.
A: It might be necessary for someone in the financial services industry to know your Social Security number to complete an application for almost any financial product, says Vince Clanton, a certified financial planner in Atlanta. Life or health insurance policies, annuities, mutual funds, and a brokerage account all require that you establish your identity.
If you wanted to set up an automatic payment or deposit, it would be necessary to know your bank account number. This typically would also include a blank, but voided, check, he says.
Mr. Clanton's advice is to always know who you are giving this information to, and the reason that they're asking.