Debt Management Companies To Avoid
Scammers Disguised As Debt Management Companies
Despite desperate appeals for help, several unscrupulous individuals, in the guise of debt management companies, take advantage of the confusion and helplessness of consumers buried in debt. They promise to help pay off your debt if you pay their hefty upfront fees. But can you entrust your limited resources to these companies? How do you pick a debt management company that would be true to their promises? Watch out for red flags that reek of fraud.
Red Flags When Considering Debt Management Companies
Numerous Pending Grievances Filed With the BBB. Before rolling up your sleeves with a debt management company, check the Better Business Bureau, the local consumer protection agency or Attorney General in your area for any negative record that this company may have. Complaints against debt management companies may not be unusual but if a large proportion of these have not been resolved, you better think twice before getting their services or you may be an addition to the statistics.
No Written Agreement And Plan. When getting the services of a debt management company, ask for a written copy of the terms and conditions of their service. Do not make any upfront payments without this. Go over the terms and if there are items that are not agreeable to you, try to negotiate with them. If after discussing terms you still do not see eye to eye, start looking for another debt management company. Besides a written contract, also ask for a written debt management plan to give you a clear picture of how they will go about your case. An absence of this plan may indicate that they do not really know what they are doing or may not be planning to do anything for you.
Hefty Charges. Although there are many authentic non-profit debt management companies, there are those that classify themselves as not-for-profit so that they can use this as a means to persuade you that their hefty fees are legit. Reputable debt management companies understand that you are in a financially tight spot and in dire need of their assistance. It is not impossible to find debt management companies that charge reasonable fees and can really deliver their tasks and help you.
No Clear Info on How Your Payments Are Apportioned. When working with debt management companies, debtors will be asked to send them money monthly to be distributed to the different creditors. They should provide you with the accurate details of where your money is going. Otherwise, look for another firm to help you.
Suggestion To Cease Payment To Creditors. While some debt management companies offer this advice for a particular purpose, such as debt settlement, it may not be a wise idea as it can hurt your credit score. Each time you miss payment, it is reported to the credit bureau and your credit rating bears the impact.
Assurance To Clean Off Bad Record From Your Credit History. Debt management companies that promise to take out bad history in your credit record may be promising you the moon. They are not authorized to edit any details on your credit record. The most they can do is to try to ask creditors to have the negative record deleted. You can do this yourself.