Tips to Avoid Debt Management Scams

19 Mar Tips to Avoid Debt Management Scams

In many cases, people that seek bankruptcy consultations have unsuccessfully tried to regain control of their finances through a debt-management company. All too frequently, the result is that they find themselves deeper in debt after paying hefty fees to the company. As Marshall Loeb, writer for MarketWatch, reports,

Be especially wary of debt-consolidation or counseling organizations that:

  • Charge high up-front or monthly fees for enrolling in credit counseling or a debt management plan.
  • Pressure you to make “voluntary contributions,” another name for fees.
  • Won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit-card account numbers, and balances.
  • Try to enroll you in a debt-management plan without spending time reviewing your financial situation.
  • Offer to enroll you in a debt-management plan without teaching you budgeting and money-management skills.
  • Demand that you make payments into a debt-management plan before your creditors have accepted you into the program.

There is no doubt that bankruptcy should be a last resort, but not always THE last resort. If you do wish to try debt management, make sure you:

Remember, if your attempts at debt reduction fail, bankruptcy offers you a financial fresh start.

See also Debt Consolidation, Debt Management, and Debt Negotiation.

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Chip Parker is the managing partner of Parker & DuFresne, P.A., where he represents Northeast Florida businesses and consumers facing bankruptcy, and homeowners facing foreclosure. His firm files more homeowners in the Mortgage Modification Mediation Program than any other law firm in Northeast Florida. Parker is the recipient of Jacksonville Area Legal Aid's prestigious Award for Outstanding Pro Bono Service. Mr. Parker is an active member of the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
  • Sam Martin
    Posted at 06:23h, 17 May

    I always admire the way you present your blog site posts.They are always so informative and neatly placed with the simplest of words used.Thanks a lot for sharing.