Debt Management Offers ...Too Good To Be True?

It's your money - don't risk losing it! In these

tough economic times, scam artists are

seizing the opportunity to take advantage of

those that have fallen behind on their

payments. If you find yourself in debt, there are many

things to consider before seeking any outside help.

Debt advertising is everywhere - these ads can be

 extremely tempting for anyone experiencing credit

problems. But, the BBB warns, enlisting the help of

 these agencies may actually leave your credit

in worse shape than if you had ignored the

enticing offers altogether.

Many of these "debt management" companies operate by

exploiting the uncertainties that people have regarding some

basic debt terminology. The terms companies use often

confuse their customers and include:

            Debt Negotiation/Settlement:

*       They claim to negotiate with lenders to lower a

 consumer's total debt owed for an upfront fee. People

that pay for this service may find that their lender was

 never contacted by the company they hired, who

instead took the money and ran.

            Debt Consolidation:

*       They offer to 'roll up' various debts to allow for

one lower payment to be made to their company,

rather than having to make many payments to

different lenders. Companies that offer this service

may charge high fees and interest rates to the

consumer - You could end up paying much more in

the long run.

            Debt Elimination:

*       They claim your upfront fee to their company

will result in a document presented to the lender that

supposedly absolves you of your debt. However, you

will later find out that this document has no bearing

whatsoever and your full debt remains, along with the

fee that was originally paid to the debt elimination

company, and usually additional over-the-limit and

other late fees to the lender.

********BBB offers the following advice for consumers to follow

before enlisting the help of any business to manage debt:

* Stay in contact with lenders and try to work out a plan on your

own first before enlisting outside help.

*Always check the company out first with BBB. BBB Reliability

Reports on debt negotiation, consolidation, and elimination

companies are available online for free at bbb.org.

****A great step is to start with a credit counseling service. Credit

counseling services, like Consumer Credit Counseling

Services, are often nonprofits, members of the National

Foundation for Credit Counseling and offer financial

guidance for a small fee, or for free in many cases. Click here

 for more advice on choosing a credit counseling agency or

click here to find credit counseling locations in your

community.

Consumers are invited to view BBB financial literacy video tips that delve into more information about debt management and a variety of other financial topics.