Debt management is a legitimate debt relief option but you have to realize that there are companies giving them a bad name. Recently, there are two debt relief companies in Tampa that made the headlines because they are being investigated by the State Attorney General. These companies are giving the whole industry a negative reputation which affects the confidence of the consumers that should be benefiting from it.
The reality is, while there are sincere companies who wish to help struggling Americans get out of debt, there are those who only wish to fool others. They come under the pretense of concern, charge upfront fees then run away with the hard earned money of the hard working consumer. It is impossible to get rid of all of them so what every consumer should do is to know the signs that distinguishes the legitimate companies from the not.
To help you, here are the signs that will indicate that you are dealing with the wrong debt management company.
We’ve actually mentioned the first already and that is upfront fees. If the company is asking a deposit before they do anything, you have to run as far away from them. No legitimate company will ask this from you because the government strictly prohibits it. So anyone who is brave enough to ask this, you can assume that there is something fishy about them. Fees can only be charged if there is proof that the company was able to accomplish what was agreed upon during the contract signing.
You should also scrutinize the advertisements of every company that you deal with. For instance, a debt management company should never promise to lower your interest rate because this is never a guarantee. Perhaps the only guarantee is a lower monthly payment once the creditor agrees to the debt management plan that will be presented to them. This plan should be according to what your funds can afford.
During your first meeting with the company, be wary if they are proposing a solution even before they have seen your finances. Do not let them force you into a program if they haven’t even analyzed your debt problem.
You should also ask for a complete list of the charges that will be asked from you and when they should take effect. Hidden charges are also not allowed. Do not agree to pay any fees that was not discussed previously. It has to be very transparent.
Speaking of transparency, the process involved will have to be clear as well. The debt counselor should discuss it with you so you can decide if that is the type of program that you want to be involved in.
It is important that you familiarize yourself with the Telemarketing Sales Rule (TSR). All of the points that we discussed previously can be found in this law. It is implemented by the Federal Trade Commission or FTC. In fact, any complaints that you may have against any company can be filed to them.
And while you are at it, read about the other debt related laws like the FDCPA or Fair Debt Collection Practices Act. Knowledge will be your best asset against your debt problems and abusive companies so do your research well to know the rights protecting you.