Credit Counseling Services
By Jamie Clark, Thu Dec 8th
If you are one of the millions of Americans who have tons ofcredit card debt you may be considering using a creditcounseling service. In fact, if you're considering filing forbankruptcy, a new law will make it compulsory to work with oneof these services. But the credit counseling industry is filledwith sharks and there are a few things you need to know beforeyou jump into the water with them.
First of all, recognize that many credit counseling services -even the "non-profit" ones - can actually leave you in deeperdebt than when you started. They convince you to enter one oftheir "debt-management" programs and begin charging large fees(which are often hidden) that can end up making your total debtsignificantly larger. It's a huge scam that many people havefallen prey to. Make sure you aren't one of these people!
To protect yourself you must learn how to recognize thedifference between a real credit counseling service and a scam.A good service will provide helpful debt advice, work with yourcreditors, lower your monthly payments, help you set a budget,and charge you a small monthly fee for their services (usuallyno more than $20 a month). They may also charge a small set-upfee that shouldn't be more than $50.
A "scam" credit counseling service can often be easilyidentified by their aggressive marketing and sales techniques.These are the companies you see advertised just about everywherenow: in magazines, newspapers, television, internet, and throughspam email. They offer quick fixes to your credit problems andpromise to be your new best friend. Often, their ads willprominently display their non-profit status, hoping those wordswill instill a sense of trust in people. But, in reality, thesecompanies seek the non-profit, tax-exempt status in order toevade state and federal consumer protection laws
So what can you do to protect yourself from scammers? Take yourtime and do your research. Here are a few tips for finding agood credit counseling service:
-If possible, work with a credit counselor in your area who youcan sit down with on a regular basis, face-to-face.
-Check with your local Chamber of Commerce and Better BusinessBureau to see if there are any outstanding complaints againstthe counselor you are considering. If there are, you probablywant to choose another service.
-Find out if the agency offers free educational material. A"real" credit counselor will want you to be knowledgeable abouthow their services work. A bad counselor will want to keep youin the dark so they can get your money.
-Ask about fees. If the setup fee and/or monthly fees seem toohigh, go somewhere else. Also, find out if they keep anypercentage of the payments you send them. Scammers will oftentry to keep a large percentage of the first payment as part oftheir "voluntary" fees.
-Ask how the counselors are compensated. If they work oncommissions or get incentives for signing people up for debtconsolidation programs walk away.
-Make sure that the agency is accredited and that yourcounselor is trained and certified.
-Call your creditors (usually your credit card companies) andask if they will work with the credit counseling service you'reconsidering. If they won't the service can't do you much good.
-Get all of the counselor's promises and terms in writing.Don't think that any verbal promises they make are binding.
-Be sure that the agency you choose provides you with monthlyreports that show who is receiving your payments and how muchthey have been paid.
By doing your research and asking the right questions you canprotect yourself from credit counseling scams. A good counselorwill help you solve your debt problems. A bad one will only makethem worse. Take your time and choose well!
About the author:Jamie Clark is a writer and researcher forCredit-Counseling-Truth.com. For more useful information andresources related to credit counseling visithttp://www.credit-counseling-truth.com today!
