Author: Megan A. Lloyd
When you find a bad credit situation is easy to find hope in credit counseling agencies. You feel safe when someone says they are a “nonprofit organization.” But often, those offering help are helping only them.
Federal and state regulators are the consumers that some credit counseling agencies are not what they seem. Actually may be using a non-profit status to avoid consumer protection laws. This gives them the ability to benefit you, the consumer trusts.
What makes the nonprofit agency? All you have to do is provide free education and counseling services. But many agencies are using these as a way to hustle customers in the management plans of the debt, they pay big time.
With most plans, debt management, the client pays the agency a certain amount of money each month. The agency then pays customer bills. The agency negotiates lower interest rates and the abolition of fees by credit card and Loan Company’s customer. The credit card companies usually give the agency a kickback, a percentage of the amount refunded.
Many experts say that customers are often pressed for the plans, even if they do not need. Some agencies do not pay their bills on time, and the sufferer.
Even the IRS has enhanced its review of agencies seeking nonprofit status.
There are legitimate credits counseling agencies that can help you with your financial problems. Compare and just do your homework when choosing an agency.
Talk and visit several agencies before selecting one. Do not let the nonprofit label fool you into thinking that some agency is better than the others. Nonprofit status does not differentiate well from bad, to do it yourself.
Beware of agencies that want the “voluntary” and high monthly service charges. If you have financial problems, most likely cannot afford high fees. Before you sign up for a debt management plan, request a written statement of all agency expenditures.
If an agency says they can get you out of debt quickly and slash all interest rates, I think not. First, to get out of debt takes time. Just look for a plan to get there a little faster – but still takes time.
Second, interest rates are determined by the credit card companies, not the Agency. Many creditors do not lower their rates. Some will. The Agency has no idea of knowing what the future holds.
Check with your creditors to make sure they are willing to work with the agency you choose. Once you have started a payment plan, make sure that your creditors receive their payments on time. If they do, it’s your problem.
Ask for a reliable agency. Check with the Better Business Bureau and Office of Attorney General in your state to see if there are any complaints on file. Ask the agency if they are members of the Association of Credit Counseling independent agencies or the National Foundation for Credit Counseling – two groups that have known the rules and limitations of the quota.
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Posted in Credit Counseling | Tags: Companies, credit card, Credit counseling, credit counselor, credit situation, creditors, Debt, financial, financial problems, management plans, money, payment plan