Many people turn to these agencies first before they consult with an attorney. We are sure they work for some people but many clients have expresses great concern over the way their financial affairs were handled by credit counselors. We do not discourage debt counseling because as a firm we care for you- the client. Any step you take in stopping the financial tailspin you are experiencing is positive. We have received reports from several individuals that they received no help from credit counseling. These cases usually involved agencies that require a large payment up front or ones that state they will hold your money and then try to negotiate settlement with your creditors. Before you enter this type of arrangement contact the Missouri Attorney Generals CONSUMER FRAUD office and the BETTER BUSINESS BUREAU.
These credit counseling companies contact your creditors and tell them you are having financial problems. They tell creditors you will make one payment to the Credit Counselor who distributes it to the creditors. Creditors must agree to this. You make a payment to the credit counseling agency and they charge you a fee for their service. The interest rate and what you owe remain. .People often get confused and think their services are free because they are a not for profit corporations. That is not true. Not for Profit is a tax status and does not mean they offer their services even at a discounted rate. Often the fee you pay to credit counseling in just one month is enough to have paid to file your bankruptcy. The other type of credit counseling service asks that you pay them a monthly fee that they hold. You are told they will pool your money and then negotiate settlements once they have a sufficiently large lump sum of money. The first two to three payments are their administrative fee. This form of credit counseling often fails because you get sued on the debt before a large enough sum of money is collected. Stay away from these type of arrangements at any cost.
