Florida Bankruptcy Services Advise on Credit Counseling Scams

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With changes to the bankruptcy code in 2005 demanding mandatory credit counseling and the increase in bankruptcy filing, credit counseling and credit repair scams now abound. While there are certainly legitimate credit counseling agencies, there are also many that are not. Legitimate agencies function as a go-between between you and your creditors, offer advice on credit management and direction on budgeting. However, many not-so-legitimate agencies make insane claims such as wiping your credit history clean, getting you a new social security number (which is illegal, by the way), and wiping out all your debt. Many of these agencies actually deliver very little, and not cheaply at that. Up front money is one of their standard operating modes and can be more than $1500, in some cases. Then, once they have your money in their paws, they vanish leaving behind only an empty store front or unanswered calls. Bankruptcy services in FL maintains a list of reputable credit counseling agencies.

So what are the red flags that a credit counseling agency is not all it says it is? How do you avoid being scammed in part or whole by some of these folks?

1. If it sounds too good to be true, it likely is. An old adage, but very true here. Beware of miraculous cures and unreasonable sounding promises.

2. No up front fees. No reputable company will ask for fees up front. The first consultation should always be free and other visits a small, monthly fee.

3. Do your homework. Before engaging an agency on your behalf, check with the Better Business Bureau or your state’s consumer advocate office. Any reported disputes should have been resolved satisfactorily and in a reasonable amount of time. Check with bankruptcy services in Florida to see if the agency in question is on their government approved list of agencies.

4. Beware of unreasonable fees. Any high fee or other requested payment that seems unwarranted probably is. No reputable agency should ask for any payment other than the agreed upon monthly fee.

5. Confirm payments with creditors. Some counseling agencies want customers to send in a lump sum monthly that will be divided among creditors. Give those creditors a call on your own to verify that they did indeed receive payments.

What’s the best way to find a legitimate agency?
The National Foundation for Credit Counseling provides many sources of advice and articles on credit counseling and how to choose an agency. Also, bankruptcy services in Florida can help you locate a reputable credit counseling service.

Non-profit agencies are always the best choices. There are reputable for-profit organizations as well, but combing out the bad from the good may be more difficult. A really good agency will offer education as well as counseling, debt consolidation and mediation. After all, once the debts are satisfied, you will want to know you have the knowledge and tools to move on successfully.

Carefully read any agreement from your chosen company. All terms of the agreement should be plainly set forth including any fees, services to be rendered, payment terms, total cost, the length of time required for results, any guarantees offered and the business’s name and address.

And, above all, listen to your instincts. This stands repeating: If it seems too good to be true, it probably is.

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