Sobering Facts About Debt Management Credit Counseling

Debt management credit counseling is a vital service provided by both 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’ actually describes two distinct services – debt management and credit counseling.  The credit counseling part of debt management credit counseling takes place first.  It entails a discussion between the client (debt holder) and a trained specialist that is designed to get a clear financial picture and map out ways to make the best use of the client’s existing income for paying off unsecured debts.  In some cases, this discussion reveals that the client cannot feasibly continue making monthly debt payments on time, which indicates the potential need to move into the debt management part of debt management credit counseling.

Sadly, the need for debt management credit counseling has skyrocketed in recent years, as more and more Americans get in debt over their heads.  Most of the time, this is due to the irresponsible use of credit cards, but sometimes it happens due 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.  And this presents another dilemma.  Whenever any industry experiences fast growth, lots of new players get into the act looking to make a quick buck.  In debt management credit counseling, unfortunately, there is no shortage of snake oil salesmen.

Knowing this, it’s highly advisable that anyone seeking debt management credit counseling investigate the companies they’re considering doing business with very thoroughly.  Here’s a statistic that should alert you to the growing problem.  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 read the fine print (all of it!).  Never give a debt management credit counseling service one penny of your money 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 bilked 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!