When you find yourself in a bad credit situation it is easy to find hope in credit counseling agencies. You feel safe when someone says that they are a non-profit organization. But often, those that are offering help are only helping themselves.
Federal and state regulators are warning consumers that some credit counseling agencies are not what they seem. They may actually be using a non-profit status to avoid consumer protection laws. This gives them the ability to advantage of you, the trusting consumer.
What makes the agency non-profit? All they have to do is provide free education and counseling services. But many agencies are using these as a way to hustle clients into debt-management plans, which pay off big time.
With most debt-management plans, the client pays the agency a certain amount of money each month. The agency then pays the clients bills. The agency negotiates lower interest rates and the waiving of fees with the clients credit cards and loan companies. The credit card companies will usually give the agency a kickback, a percentage of the amount repaid.
Many experts say that clients are often pressured into the plans, even if they...
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