Consumer Credit Counseling Services – Many are Scammed, Beware!

Written by admin on December 5th, 2010

Credit counseling agencies are nonprofit organizations that intend to help debtors to resolve their debt issues by providing counseling and education on consumer credit, money, debt management, and budgeting. And, most of time, debtors are advised to enroll into a debt management plan so that they can follow the plan to work out of debt. Debt management plan proposed by reputable and legitimate credit counseling agencies do serve the purpose.

But, beware that many very attractive debt management plans offered by companies who called themselves credit counseling organizations are actually scams who are trying to cheat your money and worsen your debt situation. So, how could you avoid yourself from falling into these traps? Let go through 2 scenarios that you will potentially faced when approaching a credit counseling service which may run by scams.

Scenario 1: Propose A Debt Solution Without Analysis Your Financial Situation

When you consult a credit counseling agency, the counselor suppose to analyze your financial situation by understanding all your debts, expenses and financial affordability before he work out plan that best fit your financial situation. If you found that your counselor is not paying attention when you explain your financial difficulties and he did not ask you the questions to get further understanding on your debt problem. What he is trying to do is propose their best debt management plan to you with a number of guarantees that your debt issue will surely be resolved if you enroll into the plan.

Don’t ever trust him else you will regret once you sign up and hand over your money. And, after that found out the propose debt management plan does not fit your financial situation. Avoid yourself from credit counseling agencies that propose to your one debt management plan that fit all financial situations. They just want to earn your money without really help in your debt problem.

Approach other credit counseling agencies and get one that really care about your debt problem, educate you on the cause of your debt issue, tell you what are your options based on your current financial status and guide you on the best debt solution with or without a debt management plan.

Scenario 2: Charge You An Upfront Cost Or The Fee Is High

The rule of thumb, credit counseling services are free of charge but most debt management plan (DMP) offered by credit counseling services have certain fee. The fee of DMP should be deducted directly from your monthly payment and it should not be too high; the reasonable fee should be plus minus . If you are asked to pay an upfront cost during sign up with the debt management plan, then it better to reject the plan and approach other credit counseling agency.

Beside that, before you sign on the agreement for the propose debt management plan, remember to check in details for any other hidden costs. There are unethical companies hide other costs to make the plan very attractive. These hidden costs will be written in the agreement. Unfortunately, most people won’t read the agreement in details when they sign on the dotted line. If you are unclear or need more time to read through the terms and conditions stated in debt management agreement, request to bring the agreement back to home for reading and sign back to the company if the terms meet your requirements.


Reputable and Legitimate credit counseling agencies are organization that help debtors to reduce and resolve their debt problem through counseling & education. They may recommend you to enroll into a debt management plan if your case really needs one. Whereas, credit counseling agencies run by scams care more on their profits than your debt problem. You should smart enough to differential them and avoid yourself from these scams.

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