Debt Counselling Info

As you begin your search for a debt counselling agency, there are several things you should look for and be aware of.  Below is a simple list of some signs that should set off your ‘scam alert’ detector.

Steer clear of any agency that advertises on television

These may or may not be scams, however, the reason to avoid them is simple.  Advertising on television is quite expensive.  Someone has to pay for that advertising.  Who do you think that will be?  Debt counseling agencies that advertise on television pass those expenses on to their clients, often in the form of inflated fees.  It is also wise to avoid agencies who contact you by phone or by sending spam emails.  You should put yourself in the driver’s seat by making the initial contact and shopping around.  Remember, the consumer debt counseling agency you hire works for you.

Be aware of sensational catch phrases

If an agency representative tells you they will ‘eliminate all of your debt in just 30 days,’ watch out, because this is not possible.  The only way to completely eliminate all of your debt is to declare bankruptcy and that is exactly what you are trying to avoid by seeking the help of a reputable debt consolidation counseling  service.  With the right relief options you can realistically expect to eliminate some of your debt and/or reduce it to a manageable level.

Beware the ‘non-profit’ designation

During your search, you will likely come across free debt counseling advertisements from companies claiming to be non-profit organizations.  This should send a red flag up the pole immediately.  Some agencies will claim to be non-profit but actually be for profit.  The profit is gained in the form of high ‘required voluntary contributions.’  This is not to say that all non-profit agencies are scams.  Many are legitimate businesses.  Certainly, a non-profit agency can charge a fee to cover operating expenses and such, however, unreasonable contribution fees, like hundreds of dollars, should set your scam alert device off.  Some of the information we found suggested avoidance of these types of agencies all together.  Other information sources suggested a thorough check into them before signing on. A couple of suggestions for this would be the Better Business Bureau or the National Foundation of Credit Counseling.  Both are reliable sources for verifying the status and reputation of an agency.

Protect your personal information

In the event that you do find yourself discussing debt relief possibilities over the phone or on line, never give out any personal information such as credit card numbers, bank account numbers, social security numbers or even employment information.  If an agency representative calls you and starts asking for personal information to ‘process your paperwork’ or ‘get the process started,’ end the conversation immediately.  The only way you should begin the debt relief process is face to face and only after you’ve researched the company.  This should be common sense in this day, however, people get caught in con artist’s snares everyday by giving out personal information over the phone or on line.

Beware of exorbitant and/or up front fees

Another indication that a scam is in progress is a demand for large fees to be paid up front, before any work has been done.  One of our sources indicates that fees should be based on performance and a percentage of the results.  And that most of them should be charged at the end, not at the beginning.  Another source indicates that you should never agree to an up front fee higher than $20.  If an agency has a ‘fees up front’ policy, hold on to your wallet.  Their main focus is most likely simply getting you to sign on the dotted line and getting your money, rather than what the end result will be.

How much time does the counselor spend with you?

With a reputable agency, the counselor will initially spend a minimum of 30 minutes, ask you many questions and listen carefully to your answers regarding your financial situation.  Then a strategy, tailored specifically to your situation is drawn up. This is how debt counselling takes place.  If the counselor appears to be under some kind of time constraint or appears distracted and not focused on you, it could mean something is amiss.  Also, if he/she spends the whole time telling you about their tested and approved ‘program’ for ‘eliminating’ your debt, you should consider moving on to the next company.  There is no one program for debt reduction.  A successful plan for reducing your debt is one that is created and adjusted to meet the specific needs of your financial situation.

Although this list is not all-inclusive, it does point out some of the major warning signs regarding the debt relief scams known to exist.  Also see the article entitled Locate a Debt Counselling Agency for other important do’s and don’ts.  We hope to add more information here as we grow. We encourage you to look for these kinds of things as you begin your search for a debt counselling agency.