Credit Counseling - Six Tips to Avoid Counseling Scams
Charles Essmeier
Credit counseling is a useful service for anyone with problem
debt. A good counseling agency can provide advice regarding
money management and debt consolidation. They can also help
arrange a repayment plan with your creditors to help you get out
of debt. A bad agency can charge excessive fees, pocket money
that was intended to pay your bills, and steer you into greater
debt than before. Predatory credit counseling has become a
multibillion dollar industry, and with the recent passage of the
Bankruptcy Abuse and Consumer Protection Act, credit counseling
will soon become mandatory for anyone filing for bankruptcy. How
can you avoid becoming a victim of credit counseling scams? How
can you choose a helpful and reputable credit counselor?
Here are a few tips that can help you avoid becoming a
victim of predatory agencies:
Many agencies claim to
be nonprofit, but that doesn’t mean they don’t charge money or
work with for-profit companies. Inquire about the fees the
company charges. Is there a setup fee? Monthly payments? Does
the company keep the first payment, or does some of it go
towards your debts? Fees should fall within your ability to pay,
and any agency that is trying to help you will know this. A
company that charges hundreds or thousands of dollars in setup
fees is probably not interested in anything other than your
money.
Ask the counselor how he or she is
compensated. A salary or hourly wage is a good answer, but you
should be suspicious if they are on commission or earn
incentives by steering you towards expensive debt consolidation
programs. A good counselor should direct you towards solutions
that help you, not solutions that earn them more
money.
Will your creditors work with this
agency? Call your creditors directly and ask them if they will
negotiate with the specific agency you’re seeing. Counselors
often state that they can get your creditors to lower fees,
restructure debt or lower interest rates. Can they? Call the
creditors yourself to be sure.
Make sure that
you get all of the counselors promises and terms in writing.
Anything that he or she tells you verbally isn’t binding, so
don’t believe it if it isn’t written down.
Make
sure your agency provides you with monthly reports that state
how much you have paid them and who is receiving the payments.
Don’t take them at their word that your bills are being paid;
verify it.
Check with your local Chamber of
Commerce or Better Business Bureau to make sure that there are
no outstanding complaints against this agency. The counseling
business is full of fraud, and complaints are common. It’s smart
to inquire.
By taking your time, asking the right
questions, and doing proper research, you should be able to find
a helpful and reputable credit counselor who can help you reduce
or eliminate your debts. Thousands of Americans are victimized
each year by predatory counseling firms, but there’s no reason
why you should become a victim of one. If you have problem debt,
you have trouble enough already without looking for more.
About the author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the
owner of Retro Marketing, a firm devoted to informational
Websites, including End-Your-Debt.com, a site devoted to establishing credit,
debt consolidation and credit counseling.
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