Credit Counseling On Late Night TV? Change The Channel!

March 27, 2007 By

Many people who are having financial problems can’t sleep at night. The credit counseling industry knows it, so that’s why you see so many of those debt management commercials on late-night television.

They all sound so promising. A quick phone call and your bill problems will disappear. But not so fast – you need to do some homework before you fork over your hard-earned money to some late-night huckster.

But before choosing a debt management program, be skeptical. It’s better to find help from a reputable organization such as the NFCC. The Federal Trade Commission also advises consumers against choosing a debt-management program without meeting with a certified credit counselor first.

Be especially wary of debt-consolidation or counseling organizations that:

  • Charge high up-front or monthly fees for enrolling in credit counseling or a debt management plan.
  • Pressure you to make “voluntary contributions,” another name for fees.
  • Won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit-card account numbers, and balances.
  • Try to enroll you in a debt-management plan without spending time reviewing your financial situation.
  • Offer to enroll you in a debt-management plan without teaching you budgeting and money-management skills.
  • Demand that you make payments into a debt-management plan before your creditors have accepted you into the program.

Source of post: MarketWatch.

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  • LadynRed

    One other thing to be wary of. If they make promises that their debt management/negotiation/settlement plan will NOT hurt your credit, they are lying. Negotiation and settlements usually means you must stop paying your creditors – and pay them only. The result is accounts go continuously delinquent, get charged-off and go into collections, all of which trash your credit. All this while you are shoveling money into an escrow account until there’s enough money for them to try to negotiate with your creditors. A notation of ‘debt management plan’ on your credit reports is nearly as bad as a Chapter 13 bankruptcy – it will tank your scores.

    I almost forgot.. most of these places offer NO protection whatsoever from lawsuits, and neither creditors nor collection agencies are required to work with them.

    As distasteful as it may be, if you’re in that deep, a Ch 13 would be better, at least you get some modicum of protection from creditors.