Credit counseling organizations

6/22/2009 9:40:58 AM

Some credit counseling organizations that are reputable employ counselors who are certified and trained in consumer credit, money, and debt management and budgeting. These organizations are non-profit; they have a legal obligation to adhere consumers with reliable information such as education and counseling.

Not all credit counseling organizations submit these services on a free basis. Majority of the organizations charge high fees, which are disclosed or pressure consumers to voluntarily contribute causing them to drown deeper in debt. Recommending a debt management plan is the most common response to consumers before credit counselors take the time to look over your financial situation, and provide little to no educating and counseling to consumers. A misrepresentation of the company’s non-profit status: and fraudulently obtaining a nonprofit status by misleading regulators about their business practices.

The nation’s consumer protection agency, The Federal Trade Commission (FTC), and some state Attorneys Generals have prosecuted several companies that acknowledge themselves as credit counseling organizations. The FTC has stated that these credit counseling organizations have lied to consumers about the cost, origin, and benefits of the service they offered; some companies even were dishonest about their non-profit status. Some credit counseling organizations are now going out of business. Many similar companies are closing their doors even though an attempt of prosecution by the FTC or the states. This can be of importance if you have a debt management plan with one of these companies.

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