How To Select A Legitimate Credit Counselor
Credit counseling companies began as non profit companies that were largely funded by the credit card companies to help consumers avoid bankruptcy. It was good business for both the banks and the consumers. The banks could still get paid something and the consumers could avoid bankruptcy. Credit counselors would negotiate a lower payment and sometimes a lower interest rate on the debt in exchange for which the counselor would collect the monthly payment from the consumer and pay the creditor.
Some less scrupulous companies came on the scene in the 1990s that offered to lower the interest rates for consumers who were not having any trouble with their credit cards, but simply wanted a lower interest rate. Many of the credit card companies began to withdraw their support to the industry and it suffered. Moreover, some of these credit counseling companies retained the funds that were paid to them instead of paying these funds over to the creditors. This resulted in consumers ending up with even worse credit than before due to payments that they made to the credit counselors not being forwarded to the creditors.
If you are able to make more than the minimum monthly payment, then credit counseling is probably not for you. Still, if you need the services of a credit counselor, be sure to check out the prospective credit counselor by:
- Google it. Find out who has said what about it. Find out if any complaints have been lodged against it. Find out how long it has been in business.
- Contact the Better Business Bureau and see what it has to say about the prospective credit counselor.
- Find out what fees are involved for its services and get it in writing.
You may find that a credit counselor may not be able to resolve your debt issues. At that point, you may be better off filing for bankruptcy.