Consumer Credit Counseling Be Cautious Of Counseling Companies
Consumer Credit Counseling follows the approach of negotiating with creditors in order to minimize payments and interest rates. Credit Counseling is only effective for clients with minimal debt who are able to pay off the entire debt. Unlike Debt Consolidation, this process does not minimize actual debt.
Many Credit Counseling organizations claim to be non-profit however receive payments from the actual creditor. With such a negotiation this can many times lead to greater debt or higher interest rates. It is no longer in the organizations best interest to actually minimize debt but to prolong it.
Charge high up-front or monthly fees for enrolling in their program.
That pressure or urge for you to make "voluntary contributions."
Refuse to send you free information about the services they provide without requiring you to provide personal financial information such as: credit card account numbers, and balances.
Try to enroll you in a Debt Management Plan (DMP) without spending time reviewing your financial situation.
*Debt Management Plan - an arrangement with unsecured creditors, prolonging the period of which the debt can be paid. Resulting in smaller monthly payments however, resulting in higher interest rates.
