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SolveYourProblem.com
Article Series: Debt Relief & Debt Consolidation
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Consumer
Intelligence:
Choosing Smart Debt Consolidation
There is an onslaught of American consumers
acquiring more debt. It makes for the business of debt consolidation
management an emerging industry. Nonetheless, as the marketplace
of the indebted continues to reach proportionate heights, it
does not do much for the consumer. According to IRS commissioner,
Mark W. Everson, “The new breed [of non-profit credit counseling
agencies] appears to be more focused on marketing debt management
plans than providing educational or charitable services.”
Over the last seven years, the United States economy has been
quite turbulent. Pre-9/11, American consumers demonstrated
gluttonous buying behavior. Wallets and purses tightened after
the crisis at the World Trade Center. As the economy continues
to boomerang, many patrons are feeling the aftershock of a
previous time of financial depravity. Subsequently, credit
counseling services, debt management plans and debt consolidation
loans are inundated with clients to serve.
The overwhelming number of grievances regarding non-profit
credit counseling agencies is an emerging concern. Tens of
thousands consumers have filed complaints with the Better Business
Bureau regarding the unethical and false representation of
the debt management organizations. The government is looking
into the problem via the Internal Revenue Service. It may conjure
new audits and income for the country, but it may not impact
predatory organizations for victimizing consumers entrenched
in debt.
Services Offered by Credit Counseling Agencies
By and large, both for-profit and non-profit credit counseling
agencies extend invaluable debt management support. The significance
of a counseling agency offers the following services:
- Acts as a
liaison between creditors and debtors
- Helps consolidate
unsecured debt
- Offers educational
information
- Assists people
with better personal financial management
The stereotypes associated with the indebted consumer are
not all true. Unlike the classification of the irresponsible
consumer who has charged their way into a financial stupor,
a vast percentage of people have incurred extenuating circumstances.
The misfortunate scenarios can be anything from a job layoff
in a dying industry, to a medical fatality to the devastation
of a divorce or even death.
Credit Counseling, an Ultimate Alternative to Bankruptcy
For the American who finds themselves ensconced in unforeseen
circumstances, there are alternatives. Since bankruptcy can
leave a big stain on one’s credit report (up to ten years),
credit counseling is the ultimate opportunity. As any industry
has ethically bankrupt groups, the same is true of the debt
management and credit counseling sector. With the escalation
of American debt, a few illicit firms have been inspired to
use consumer’s misfortune to their fortunate advantageous.
Consumer Smart Credit Counseling
Nonetheless, for the American consumer in quest of credit
counseling here are some consumer smart strategies to identify
an illicit credit counseling firm from an ethical one.
- Any non- profit
that charges excessive fees
- Fails to offer
free personal financial advice for a do-your self solution
- Neglects
to discuss or disclose fair consumer’s legal rights
- Prior
to providing counseling services, requires an upfront
payment for credit repair
- Advises the
consumer to dispute all information contained in the credit
report
- Encourages
the consumer to contact a credit reporting agency, directly
- Supports
illegal actions the consumer can take to amend their
credit (for example creating a
new credit identity)
- Prescribes
that the consumer to restructures a good credit rating
by applying for an
Employer
Identification Number (FEIN)
Essentially, whenever a professional agent, business consultant
or financial counselor recommends any type of fraudulent activity,
the consumer is liable for prosecution, as well. If you seek
help from a credit counseling agency or debt consolidation
firm that recommends any of the above fast fixes for your credit
rating, report the unethical recommendations to the Better
Business Bureau.
Five Consumer Smart Strategies to Employ Before Opting for
Debt Consolidation
Conduct a background research on debt management firms. Check
with your state’s attorney generals office and the Better Business
Bureau. If the credit counseling firm has a propensity for
committing fraudulent business tactics, they will be listed
on either the Better Business Bureau or the Attorney General’s
office.
- Determine
whether the service extends workshops on budgeting
and managing personal
finances. (It is one of the more prominent
signs of an ethical credit and debt counseling/consolidation
program).
- Request
how the financial counseling agency is paid. Generally,
when debt representatives are paid
on a commission basis, they are motivated to improve
their financial status versus their customers. Do not forget to present
the same question to any non-profit debt organization as well.
- Inquire
the credit counseling services hours of operation.
The credit and debt service should be open during
normal business hours. Be leery
of debt
management firms that contact you via telemarketing.
- Request
a list of fees. Before finalizing a credit counseling
agreement,
request a detailed overview of the fees associated with the company.
Overall, steer clear of any credit or debt management firms that
carry exorbitant fees
or abnormally high deposits requirements.
Finding the right debt consolidation program to get one’s
personal finances on track is a matter off applying the above
consumer intelligent tactics.
© About-Personal-Loans.com.
All rights reserved.
# # # # #
Holly Bentz is a finance writer and a contributor
to About Personal Loans.
About-Personal-Loans.com
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