Debt counseling is one good way to find relief for your credit card debts. Through the assistance of a competent adviser and a good debt relief agency, you will have a better chance of resolving your financial issues. However, getting debt relief has its own risks. One of these is running into an unscrupulous “debt relief” company that can put you in even worse shape.
The best way to protect yourself is to proceed with caution when choosing the right agency. Below are 4 common pitfalls regarding debt counseling and how to successfully avoid them.
- Watch out for over-promising.
Be very cautious of companies that promise far more than they can deliver. This is never a good sign. Before signing up for any debt relief program, be sure to ask yourself if the result you’re expecting from the company is too good to be true. Do they offer realistic percentages that they can actually save you on your overall debt?
To find out if your prospective debt relief agency is promising the undoable, it’s always best to do your research. Check out if the company is trusted by the American Fair Credit Council (AFCC). Read up on reviews and see if the company’s previous clients were satisfied by the service promised to them and results they got. If not, better move on to the next agency on your list or expand your search area.
- Avoid paying upfront fees.
Most reputable debt counseling agencies provide free initial consultations, and they don’t charge 100% right from the get-go. This setup gives the clients the freedom to shop around for services that best fit their financial situation, without needing to pay for a single cent while doing so.
Once the client has signed up for a service or joined a debt relief program, the agency may charge a small monthly fee to pay for the services rendered. However, you should always be wary of high monthly service charges that go straight to the debt counseling agency. This money doesn’t go into paying your debt but add to your expenses. Instead of helping you get out of the red, the high service fee might end up pushing you deeper under water.
- Check consumer reviews.
Everyone wants to get exactly what they’re paying for, especially if they’re signing up for debt relief services. However, there’s no certainty that you’ll get the outcome you want before signing up for a particular debt settlement or relief program. Your best bet at this point is checking out client reviews.
As mentioned above, watch out for reviews claiming that the agency over-promises and under-delivers. What’s more, check if the company you’re working with is involved in any lawsuits. And even if the agency is in the clear, it would still be a good idea to check the common complains and feedbacks from the agency’s previous clients. This way, you have an idea if you need to temper your expectations or take the initiative when communicating with your representative.
- Beware of scams.
While some companies over-promise, there are also those that directly scam you. This type of company may suggest that you simply obtain a new employer ID number (even if you’re not a business owner) in place of your social security number to erase your credit report and start a new one. Do not do this. This is illegal and a sure sign that you’re working with a sham.
It takes a bit of research to find a credible and competent debt relief agency that can help you attain your financial goals. While the search for the right one may consume a bit of time and effort, you’ll be sure to find that it’s all worth it once you’re free of debt.
To learn more about debt relief solutions and how to start living with financial freedom, contact CreditAssociates for a free consultation or use our Savings Estimator to see how much you could save.