One of the differences between debt consolidation and credit counseling is the presence of a debt expert. With credit counseling, you get to hire a credit counselor who will help you with your difficulties with debt. That is not present in debt consolidation loans.
While enlisting the help of professionals is a good idea, you should understand that it does pose some risks. Unfortunately, not all credit counseling agencies that offer debt management services are legit. You need to learn how to spot the scammers from the not so you can protect yourself from getting scammed out of your hard earned money. If you are not careful, you could end up in a worse situation that when you started with the credit counselor.
Given that, here are three important complaints that are usually filed against credit counseling agencies. These are all in violation of the Telemarketing Sales Rule or the TSR and is implemented by the Federal Trade Commission (FTC).
Charging upfront fees. This is one of the first things that will tell you if a company is legal or not. No legitimate company will charge you with upfront fees because this is in direct violation of the TSR. So if a credit counselor is trying to get an upfront fee before acting on anything, you know they are not after your best interests.
Misrepresentation of services and products in advertisements. Another popular complaint against credit counseling agencies is when they promise to give you certain services and end up giving you something else. These are the companies that feeds you with promises that are not like what they will give you in reality. They use these false advertisements just to get you to sign up with them. This is not allowed by the law. You have to make sure you read the details of your contract before signing or paying them anything.
Failure to be transparent when it comes to processes, charges and fees. When you are inquiring with a credit counselor, they are mandated by the law to provide truthful information about the company, the processes and the fees involved. They cannot oblige you with anything to receive this information. It should be given freely, with no obligation to sign up with them. This is how you make a smart decision about the debt relief program you will use and they should not hinder you by keeping information from you. Not only that, this is your protection to ensure that you will not be charged with anything that was not discussed prior to the signing of the contract.
If you think that the credit counselor is in violation of any of these three, feel free to file a complaint yourself. You can do so through the FTC.gov website, the Better Business Bureau (BBB.org) and the office of the State Attorney General near you. These are the places where debt relief complaints are filed.
Remember that you need to be careful because scammers prey on the desperate. Although you may be feeling quite desperate right now, it does not mean you have to rush through things. Make the right choices from hereon and you will never have to repeat any debt relief program ever again.
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