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How to Spot a Debt Counseling Scam

Posted on in Bankruptcy
How to Spot a Debt Counseling Scam

When you are struggling with a large amount of personal debt, you might find yourself considering options that were previously unthinkable to lower your debt amount. Having to file for bankruptcy is a last resort for many people, who first explore options like strict budgeting, taking loans from friends and family members, or selling their possessions. After exhausting these options, some individuals seek help through debt counseling or consolidation services, hoping to alleviate their debt this way instead of having to file for bankruptcy.

If you are facing an unmanageable amount of debt, do not take this latter route until you have spoken with an experienced bankruptcy attorney. In many cases, these kinds of offers are scams. Disreputable individuals see the struggle and desperation that those in debt are facing and capitalize on it, lining their own pockets while pushing indebted individuals further away from financial independence. Do not become a victim of one of these scams. Not all credit aid organizations are scams. There are legitimate groups offering help to those in need – you just need to be able to weed through the scams to find them.

Are the Counselors Certified?

This should be the first thing you ask any credit counseling service. A credit counselor should be certified by an independent agency to provide information about credit and debt management. You can check the organization or its certification board's standing with your local consumer protection agency to ensure its legitimacy.

Do You Have to Pay High Fees for the Service?

Many credit counseling services are free. Those that are not often charge a nominal fee, $50 or so, to provide you with the counseling you need. If the price tag of a credit counseling service will put you further into debt, do not work with that company. Beware of phrases like “donation” and “voluntary contribution” attached to an agency's service – these are fees.

What Does the Company Offer?

A credit counseling agency should offer more than just debt management plans (DMPs). You should be able to access information about credit and debt management for free and discuss all options with a credit counselor. If you are pressured into purchasing the company's services, walk away.

What Will You Learn?

The goal of credit counseling is to learn how to manage your money independently. If a company offers to take control of your debt for you or offers you a plan to consolidate your debts for a fee, you could be facing a scam. Do not begin to work with any type of credit agency until you have discussed it with your attorney.

Bankruptcy Attorneys in Chicago Can Help

Debt can be a difficult thing. If you are facing a large amount of debt and considering filing for bankruptcy, first speak with an experienced bankruptcy attorney to explore all of your options. There might be a better way for you to alleviate your debt issues or bankruptcy could actually be a positive choice for you. Contact our team at Newland & Newland, LLP today to schedule your free legal consultation.

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