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Couple looking doubtful

Debt consolidation is a great way to get your financial situation back on track. However, there are some organizations out there that are less than ideal. You should be careful to avoid them.

Many agencies claim to be nonprofit, but that doesn’t mean they don’t charge money or work with for-profit companies. Inquire about the fees the company charges. Is there a setup fee? Monthly payments? Does the company keep the first payment, or does some of it go towards your debts? Fees should fall within your ability to pay, and any agency that is trying to help you will know this. A company that charges hundreds or thousands of dollars in setup fees is probably not interested in anything other than your money.

Ask the counselor how he or she is compensated. A salary or hourly wage is a good answer, but you should be suspicious if they are on commission or earn incentives by steering you towards expensive debt consolidation programs. A good counselor should direct you towards solutions that help you, not solutions that earn them more money.

Will your creditors work with this agency? Call your creditors directly and ask them if they will negotiate with the specific agency you’re seeing. Counselors often state that they can get your creditors to lower fees, restructure debt, or lower interest rates. Can they? Call the creditors yourself to be sure.

Make sure that you get all of the counselor’s promises and terms in writing. Anything that he or she tells you verbally isn’t binding, so don’t believe it if it isn’t written down.

Make sure your agency provides you with monthly reports that state how much you have paid them and who is receiving the payments. Don’t take them at their word that your bills are being paid; verify it.

Check with your local Chamber of Commerce or Better Business Bureau to make sure that there are no outstanding complaints against this agency. The counseling business is full of fraud, and complaints are common. It’s smart to inquire.
By taking your time, asking the right questions, and doing proper research, you should be able to find a helpful and reputable credit counselor who can help you reduce or eliminate your debts. Thousands of Americans are victimized each year by predatory counseling firms, but there’s no reason why you should become a victim of one. If you have problem debt, you have trouble enough already without looking for more.

Before you do anything, perhaps you should have a consultation with Carolyn Secor.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.