Getting Out Of Debt Homepage

Question: How do you find out what debt consolodation companies are legitamate or scams?

(Posted by: googirl77 on 2009-12-23 11:05:32)

I see a lot of information on the issue. I know some are legitamate and helful to people. But I hear a lot ( in Consumer Reports and shows like Suzie Orman ) about how many of them are scams and cause more problems Is there a way to find out? And how do the ones that are scams, screwing people over?

Posted by: CatDad on 2009-12-23, 11:16:49

Most of these firms are not outright scams...but they do engage in a tactic that requires you to deliberately default on your credit cards and this can be dangerous. Stay away from any "debt consolidation " company that promises to cut your debt and payments in half through debt settlement....This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator....this entire fee goes towards building a settlement account and to the consolidator's fees to “settle� your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/ charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances...You can never predict how your creditors will respond to the deliberate defaulting of your accounts...they might settle at 50%...or they might serve you a summons, take you to court...and if they win, you could be looking at wage garnishment.

Posted by: eskie lover on 2009-12-23, 13:10:21

The organization you hear about on Suzie's show, The Today Show and CNBC is the NFCC or the National Foundation for Credit Counseling which is the nation's largest and longest running non-profit organization providing credit counseling. They have the highest standards for their accreditation and policies that ensure free or low cost credit counseling. They are able to negotiate on your behalf to resolve debt issues in an ethical and professional manner. The reason you so often hear the financial pundits touting their services is just that they are non-profit, their members are licensed, bonded and insured, and must pass a counselor certification program administered by a third party, the scammers do not. They have a website, will help you find one of their member organizations in your area at nfcc.org