Crucial Facts about Debt Management and Credit Counseling

Debt management credit counseling is a vital service provided by for-profit and non-profit organizations to help consumers better manage the repayment of unsecured debts (credit cards, primarily). The name ‘debt management credit counseling’ describes two distinct services – debt management and credit counseling. The credit counseling aspect of debt management credit counseling takes place first and entails a discussion between the client (debt holder) and a trained specialist. This consultation is designed to get a clear financial picture in order to map out ways to make the best use of the client’s existing income for paying off unsecured debts. If this discussion reveals that the client cannot realistically continue making monthly debt payments on time, then the potential need to move into the debt management part of debt management credit counseling will be considered.

Unfortunately, more and more Americans get in debt over their heads, and the need for debt management credit counseling has skyrocketed in recent years. This is usually due to the irresponsible use of credit cards or to unforeseeable circumstances, such as the loss of a job, an accident or illness, or a family emergency. Whatever the causes, demand for debt management credit counseling is at an all-time high, which presents another dilemma: the lack of shortage in scams.

Knowing this, it’s highly advisable that anyone seeking debt management credit counseling investigate the companies they’re considering doing business with very carefully. According to the Council of Better Business Bureaus, in the year 2000 there were about 400 formal complaints lodged against debt management credit counseling services (non-profit as well as for-profit). By 2002, that number had risen to over 2,800! Current data indicates that this trend is only growing, so it’s definitely a ‘buyer beware’ situation!

The best way to combat this possibility is to always read the fine print. Never pay a debt management credit counseling service until you’ve gone over every part of the written contract. In fact, it’s a great idea to have an attorney read it as well. The Council of Better Business Bureaus reports many horror stories, where consumers ended up being swindled out of thousands of dollars because they’d signed contracts with a debt management firm that included fine print that made it all legal. No debts were paid and the company kept every penny the client gave them. Due diligence is the answer!