When Credit Counselors Can Be Harmful
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Can a Credit Counselor Help Me Get out of Debt?
Some credit counselors can be quite helpful for consumers looking for a way to pay off all of their debt. However, there are other credit counselors who are not the charitable organization that they seem, and may even leave their customers in a worse position than they were in before they came for help.
Are There Any Self-Help Solutions to Decrease My Debt?
There are many self-help solutions that could can help you pay off your debt:
- Determine how much money you earn and how much money you spend by listing all your income sources and listing all your "set" expenses that you incur each month.
- Develop a monthly budget that would help you take control of your financial state.
- Contact your creditors and work out a modified payment plan that makes your payments more controllable.
- If a repayment plan cannot be made with you and your creditor, consider contacting a debt relief service or credit counseling to get other options and advice.
- Avoid using credit cards whenever possible.
However, if you feel that you are in over your head and need the help of a credit counselor, be sure to look out for the red flags associated with these programs before enrolling.
Researching Potential Credit Counselors
If you should see the following elements in a potential credit counselor, you may want to keep looking or find another way to strategize payment of debt:
- Debt Relief Services – Before you enroll in a debt relief service, be sure to check with your State Attorney General & Local Consumer Protection Agency to view any complaints that have been filed with the Debt Relief Service you are considering to enroll in.
- Do Your Homework – Find out what kind of services the Debt Relief Service provides, how much the program costs, the timeframe for positive results, all fees associated with the program.
- Fees – Determine all the fees that the Debt Settlement Company will charge you for the services and whether the fees are manageable for your financial situation.
- Disclosure Requirements – Before enrolling, the debt relief company must disclose all necessary information to you about the program and must explain all the fees and conditions on its services.
- Non-Payment – If the debt relief company tells you to stop making payments to your creditors, the company must also explain to you all the possible consequences that could result in this non-payment action.
Red Flags to Look for in Credit Counselors
When shopping for a Credit Counselor, be sure to avoid any debt relief organization that:
- Charges you any fees before it settles your debt or enrolls you into their program
- Requests you to make any voluntary contributions.
- Does not provide you with any information about the services it provides or any fees associated with the program’s services.
- Tries to enroll you in the Debt Relief Program without reviewing your financial situation or give you other options in budgeting and managing your debt.
- Requests that you make payments to their Debt Relief Program before your creditors have approved you into the program.
Seeking Legal Help
You may want to contact an attorney who has experience in consumer credit. Your attorney will be able to advise you of your rights and let you know what your credit counselor should have disclosed to you from the beginning. Your attorney will also be able to let you know if you may be entitled to compensation in a lawsuit against the credit counselor.
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Last Modified: 05-23-2014 09:56 AM PDT
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