Debt Management Credit Counseling

Carefully Choose a Debt Management Credit Counseling Firm

Those in the rapidly growing debt management credit counseling business are making money hand over fist by providing services to cash-strapped consumers. However, some of these firms take advantage of people in bad situations. When these firms genuinely try to provide guidance to help those with poor spending habits, it would be great -- most Americans need it as over 60% carry more debt than they can realistically pay for. We've become a credit-happy country, and credit card companies, payday loan offices, and other lenders encourage everyone to charge to their heart's content. The problem of course is that there isn't enough information circulating that explains how it will eventually catch up to the borrower. Not only does borrowed money (which all this debt is) need to be repaid, it accrues hefty interest and other fees the longer it's outstanding.

There are more personal bankruptcies than at any other time in history. To try to stem the tide the Federal Trade Commission (FTC) decided that anyone contemplating this move should first try debt management credit counseling. Rather than eliminating debt problems, they opened the doors to a new multi-billion dollar industry. It's true that many of these agencies were already operating, but this was like giving them carte blanche. The good news is that there are millions of intelligent men and women always on the lookout for a profitable business opportunity. The bad news is that not all of them are honest and will take advantage of someone's misfortune at the drop of a hat. Sadly, this is the case in some situations with debt management and credit counseling firms.

Most of these debt management credit counseling agencies use the word "counseling" to adhere to the new laws. In actuality they use creative ways to add even more debt to the load their clients are burdened with. Most commonly, they offer to consolidate their debt through negotiating with the creditors. They seek lower interest rates, longer times to pay, and ask the client to send the agency the monthly payment. They clean up by adding fees for their services which only serves to add to the debt. There is also no guarantee they'll make the payments on time, and they're effectively taking control of the individual's credit report. Some so-called counseling companies loan money outright to pay the bills and the interest and other fees are exorbitant.

There is certainly a need for honest and helpful debt management credit counseling. Consumers in general don't understand the mechanics of its proper use. Instead of carrying a wallet or purse full of credit cards and even taking cash advances to pay them off in rotation, a person should have only one or two. It should either be used only in a true emergency or to build a credit score for the purpose of buying a home or something else too expensive to pay for with cash. In that instance, the cardholder should buy only what they can afford to pay off before any interest is charged. This is only one of many tips effective credit counseling would explain.

To find a debt management or credit counseling specialist who can aid you in developing a personal debt solution, please submit the form found on this page. They can help ease the burden of your debt and help you build a healthy financial future.

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