A respected consumer credit counseling agency will help you build a repayment program together with your creditors and educate you on better money management procedures to avoid debt later on. However, many credit guidance services exploit people who are usually financially vulnerable, so proceed cautiously.
The Federal Trade Commission Act prohibits “unfair or deceptive acts or practices” of credit score improvement, debt settlement or counseling agencies. Some states have got laws that make it illegal for credit service organizations to claim to be able to improve credit scores.
Plus, in some states, credit advice services must register with the state Attorney General’s office and have a surety bond to work.
Voluntary Certification and Accreditation
The National Foundation for Credit Counseling (NFCC) is an independent not-for-profit organization that creates voluntary requirements for credit guidance agencies. The NFCC Council on Accreditation (COA) accredits over 4,000 credit guidance packages that meet NFCC standards.
For being accredited by the NFCC, a consumer credit counseling agency should be acknowledged as non-profit by the IRS and also have the proper local business licenses. To earn NFCC certification, a consumer credit counseling program should also use adequate constraints to shield consumers, including:
- Auditing operating and trust accounts every year
- Offering consumer education programs
- Providing detailed reviews of consumers’ income and debts, and an assessment of how each consumer got into financial trouble, with a written action plan for reducing debt
- Disbursing funds to creditors at least twice a month, or sooner in emergencies
- Giving clients a financial statement at least once every three months
The Association of Independent Consumer Credit Counseling Agencies (AICCCA) is yet another national organization with similar standards.
You will want to think before signing up with a credit guidance agency that doesn’t belong to either of these voluntary organizations.
Warning Signs
What should tip you off that you may be dealing with a less-than-reputable program?
Look for illegal fees, sometimes disguised as contributions. If your setup fees or monthly charges have grown high, they can wipe out any gain you could have made against reduced finance charges, and you would bemore well off negotiating directly along with your creditors.
Another warning sign may be outrageous statements to instantly repair your consumer credit rating. Credit rebuilding is really a gradual process, and it’s illegal to attempt to change your credit rating by constructing a new, false identity.
You should also avoid advance fee loan scams, where you’re asked to fork over money to secure a promised loan. Underneath the FTC’s Telemarketing Sales Rule, no one can legitimately ask that you pay until you actually get a loan or credit. So be skeptical of any consolidation loan, get every detail written, and don’t give your credit card, bank account or Social Security information on the telephone or online.
Educate Yourself
The simplest way to protect yourself against unscrupulous credit counselors is to:
- Check out the program’s reputation with your state Attorney General and local Better Business Bureau, and find out how long they’ve been in business
- Confirm with your creditors ahead of time that they will work with that particular company
- Understand exactly what services are offered, and whether those services address all of your debts
- Get the specifics of any monthly fees, and find out whether you’ll still be obligated to pay those fees whether or not you continue to participate in the program
- Get all promises in writing
- Read your written agreement carefully
For help with an Augusta Georgia bankruptcy, contact an Augusta bankruptcy lawyer. An Augusta bankruptcy law firm could give you the help you need.