How to Eliminate Debt Without Being Scammed
Bankruptcy sometimes feels like the only option when you're heavily in debt. A legitimate credit counselor can help you eliminate it with a realistic payment plan that doesn't involve going to court. The Federal Trade Commission (FTC) warns there are many scammers who promise to help and then disappear with your money. You must be on alert to avoid them.
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Instructions
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Create a list of potential credit counselors using legitimate sources. The FTC recommends contacting your local U. S. Cooperative Extension Service, a university or credit union. Banks and consumer protection agencies are also good referral sources.
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Call each of the credit counselors on your list and ask about services offered, fees, licensing and qualifications. The FTC states that legitimate counselors will verify that they are licensed and share their qualifications, including professional association memberships. They will be upfront about their services and fees and offer to provide a written contract. Cross off any counselors who won't share this information.
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Look up the remaining counselors through the Better Business Bureau (BBB) and check their legitimacy with the FTC and your state attorney general's office. Eliminate any who have a bad BBB rating or complaints with either of the government agencies.
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Set up an appointment with at least two of the credit counselors remaining on your list. The FTC advises this interview to help you make your final decision. Discuss your situation and listen to each counselor's proposal. Ask for a written contract to review before you make your choice. Be wary of counselors who do not want to put their fees and promises in writing.
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Follow the debt management plan created by your credit counselor. The counselor can usually get interest rate and balance reductions to make the pay-off easier. The plan will typically eliminate your debt within two to four years if you make the payments as agreed.
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Tips & Warnings
Even if you prefer bankruptcy to credit counseling, the FTC advises that federal law requires you to undergo counseling before you can file. You are required to use an agency approved by the Department of Justice's U. S. Trustee Program, which reassures you that you won't be scammed if you opt to work with the counselor instead of proceeding with the bankruptcy.
Debt elimination scammers sometimes initiate contact with you through telemarketing. Never give credit card numbers or any other personal information to a caller who claims to be able to reduce your debt or interest rates. Ask for the company name, address and phone number. Most scammers will hang up when you do, states BBB spokeswoman Alison Southwick.
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