Request a Consultation
Offering Phone, Video, and In-Person Consultations 608-784-8310

How to Recognize a Legitimate Credit Counselor versus a Scam

Before an individual can file for bankruptcy, he or she must complete a credit counseling course. Some individuals find during or after this course that bankruptcy is not actually necessary; they can manage their debt on their own through careful budgeting and a new understanding of how credit and debt work.

Not all credit counseling agencies have consumers’ best interests in mind. Some fail to inform clients of their rights and instead, steer them down paths that get them into deeper debt and others simply profit from clients through upfront fees. Remember, there is no quick, easy way to get out of debt.

Do Your Homework: Legitimate Counselors are Accredited by the NFCC

The National Foundation for Credit Counseling (NFCC) has provided credit counseling since 1951. It is a nonprofit organization that certifies credit counseling agencies that meet its ethical standards. Counselors at NFCC-accredited agencies complete training programs that enable them to aid indebted individuals effectively.

Also check your state’s consumer agency and the Better Business Bureau for information about an agency before committing to work with it.

Never Pay Upfront for Credit Services

You will find many nonprofit credit counseling agencies. It is generally in your best interest to work with one of these, though you might be able to find a reputable for-profit agency through diligent research.

What you should never do is pay fees to a credit counselor up front. Avoid any agencies that require fees higher than $100 or so and those that ask for a percentage of your debt relief as payment. Your initial consultation should always be free.

If it is too Good to be True, it is False

Always be skeptical of the things credit counselors tell you and do your own research to verify their claims. As a general rule, somebody who offers a quick, easy solution to your debt is at best exaggerating, and at worst, lying.

Be wary of credit counselors who offer “creative” solutions for managing your debt, like creating a new credit identity. The only effective ways to work through your debt are lifestyle changes and bankruptcy, which involves lifestyle changes and court oversight.

Always Know Your Rights

As an indebted individual, you have rights. You have the right to receive a contract stating the services an agency will perform for you, you have the right to estimates for the length of time you will have to spend with the company and its cost for services, and the right to cancel within three days of signing the contract at no charge.

Work with an Experienced Bankruptcy Lawyer

When you are struggling with personal debt, work with an experienced bankruptcy lawyer to get a better sense of your rights and options. Contact our team at Moen Sheehan Meyer, Ltd. today to schedule your initial consultation with us. We can discuss all your debt management options, including bankruptcy, to determine which would be most effective for you.

Published October 31, 2017
Posted in
Contact MSM Online Bill Pay