Credit Counseling - Six Tips To Avoid Counseling Scams
By Charles Essmeier, Thu Dec 8th
Credit counseling is a useful service for anyone with problemdebt. A good counseling agency can provide advice regardingmoney management and debt consolidation. They can also helparrange a repayment plan with your creditors to help you get outof debt. A bad agency can charge excessive fees, pocket moneythat was intended to pay your bills, and steer you into greaterdebt than before. Predatory credit counseling has become amultibillion dollar industry, and with the recent passage of theBankruptcy Abuse and Consumer Protection Act, credit counselingwill soon become mandatory for anyone filing for bankruptcy. Howcan you avoid becoming a victim of credit counseling scams? Howcan you choose a helpful and reputable credit counselor?
Here are a few tips that can help you avoid becoming avictim of predatory agencies:
Many agencies claim tobe nonprofit, but that doesn’t mean they don’t charge money orwork with for-profit companies. Inquire about the fees thecompany charges. Is there a setup fee? Monthly payments? Doesthe company keep the first payment, or does some of it gotowards your debts? Fees should fall within your ability to pay,and any agency that is trying to help you will know this. Acompany that charges hundreds or thousands of dollars in setupfees is probably not interested in anything other than yourmoney.Ask the counselor how he or she iscompensated. A salary or hourly wage is a good answer, but youshould be suspicious if they are on commission or earnincentives by steering you towards expensive debt consolidationprograms. A good counselor should direct you towards solutionsthat help you, not solutions that earn them moremoney.Will your creditors work with thisagency? Call your creditors directly and ask them if they willnegotiate with the specific agency you’re seeing. Counselorsoften state that they can get your creditors to lower fees,restructure debt or lower interest rates. Can they? Call thecreditors yourself to be sure.Make sure thatyou get all of the counselors promises and terms in writing.Anything that he or she tells you verbally isn’t binding, sodon’t believe it if it isn’t written down.Makesure your agency provides you with monthly reports that statehow 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 ofCommerce or Better Business Bureau to make sure that there areno outstanding complaints against this agency. The counselingbusiness is full of fraud, and complaints are common. It’s smartto inquire.By taking your time, asking the rightquestions, and doing proper research, you should be able to finda helpful and reputable credit counselor who can help you reduceor eliminate your debts. Thousands of Americans are victimizedeach year by predatory counseling firms, but there’s no reasonwhy 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 theowner of Retro Marketing, a firm devoted to informationalWebsites, including End-Your-Debt.com, a site devoted to establishing credit,debt consolidation and credit counseling.
