What used to be known as Debt Management is now commonly referred to Consumer Credit Counseling. The term refers to using an uninterested party to help you learn, understand, and budget your finances. This will assist you in paying your creditors on time, every month.

The objective used to be to teach anyone who doesn’t understand or know how to handle their finances; a logical way of paying their creditors on time every month. Teaching people to budget their money and take responsibility for their own financial picture. The companies that used to do this used a wean type program to assist people.

Now that a plethora of these for-profit companies have sprouted up all over the place. The term now refers to a company that you pay a fee too (not always, see further down), and you send them one check every month, and they budget and pay all your bills.

Doesn’t sound like a bad idea right? WRONG!

1. A non-profit “wean” type Program:

* Most of the time will be a non-profit organization (no fee to consumer)
* Required for a low fee for Bankruptcy
* Some will begin by paying your bills
* They will teach and train you to handle your finances
* If they started paying your bills, then they will “wean” you off of their services by slowly giving you more and more control over paying your bills
* In a short period of time, you will be paying ALL of your bills and will no longer need their services

2. A for-profit consumer credit counseling company:

* Since they are for profit, they will charge you an up-front fee or a per month fee (paid in advance)
* They will normally require a contract for a period of time at which time the contract will auto renew (meaning unless you cancel it will renew for a set time frame, i.e. 1 year, etc…)
* Most will not teach you how to manage your finances, think about it, they don’t want you to learn how to pay your own bills; that will mean you will no longer need their services and thus they will lose your monthly revenue
* Some of these companies even have you pay your finances and still charge you (not a really smart move here, if they are not teaching you anything and you are paying your finances; what do you need them for?)
* They do not use any sort of “wean” type of program, for the reasons stated above
* Charge a cancellation fee if you break the contract!

So how do I know if I need a Debt Management or Consumer Credit Counseling Company?

* First, you need to sit down and understand your finances. Crete an Excel spreadsheet or just put pen to paper and calculate your monthly finances (income and debt).
* Second, make an attempt to contact your creditors yourself and speak with them. Let them know about what you are going through, talk to them about your income versus your outgoing monthly bills. Request a reduction in your monthly payments or your APR.
* Third, if your creditors are still unwilling to work with you, then you can visit The National Foundation for Credit Councilors all of the recommended credit councilors listed through their site are certified and accredited.

How do I find a company who will not rip me off and take my money?

Visit The National Foundation for Credit Councilors and let them steer you in the right direction. But do not stop there. make sure before signing anything, before you make a final decision, and before you pay anyone anything; you do some research. Check up on whoever you are looking at, check theRipOff Report, check search engines, as your local Chamber of Commerce, check the BBB, and finally check the FTC. Make sure the company or the person you are considering going with is clean. Any blemishes could give you forewarning on what could happen to you. Remember this company is going to be handling YOUR MONEY! You want them to be clean of any complaints and grievances!

What should I do if I have been the victim of a less than ethical company or I have been ripped off by a company or person?

You should visit the FTC, BBB, Federal Consumer Action, and your State Attorney General’s websites. Get phone numbers and complaint forms and file them immediately. Also visit the RipOff Report website and make a post about your situation. You want to go on record as soon as you can due to statute of limitations, and if for no other reason to let everyone you can know about the people or company that has wronged you.

Make sure you follow up with these companies about the status of your complaint. Don’t just file your complaint and go away. Persistence is key here, if you want to see action taken. It may take some time, everything is not going to happen overnight. With a little bit of luck and a lot of persistence you and others like you can expose these less than ethical companies.

The FTC cracks down on all the industries they regulate often. normally when the FTC is involved they will levy high fines and/or shut companies down. They can appeal to the Federal Court System for an injunction to shut companies down for fraudulent activities.

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Check out The United Credit Authority for information and laws on Credit Repair and Credit Counseling

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