As Debt Problems Worsen, So Do Debt Counselors

As Debt Problems Worsen, So Do Debt Counselors
Sun October 26, 2003 08:59 AM ET

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By Linda Stern
WASHINGTON (Reuters) - Debt-burdened Americans have seen their financial situations deteriorate this year, but the help they seek is often worse than no cure at all.

Several government regulators recently took the unusual step of warning consumers that many nonprofit debt counseling agencies are really rip-offs.

The Federal Trade Commission, Internal Revenue Service and National Association of State Charity Officials said they are receiving an increasing number of complaints about these organizations.

Their warning follows a similar report from consumer groups that found many credit counseling agencies abuse their nonprofit status and their clients by charging high fees and failing to help people get out of debt.

The consumer groups also say some organizations seduce people into signing up even though their debt load is so heavy that they'd be better off filing for bankruptcy......>> MORE

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=3690894

using three different services, and all three had the very same problem. These people started to not pay bills in a timely matter and they got calls again. This isn't a good track record as I know only three people in these services that have told me anything about it.

I was paying off my bills, but the edit counseling people screwed up one of the cards and wouldn't evwen attempt to fix it. I was sued and ended up in Chapter 13.

Interestingly their commercial states they help find the solution -- and they did -- not using them.

Every time you turn on the TV there is an advertisment for one of those companies. I am amazed at the claims they make--and they get by with it!

I think that is one of the clearest indicators of how bad our economy really is. We are carrying a record personal spending debt load and it is coming back to bite us all. Look at the proliferation of the Debt Reduction services, and the increase in home foreclosures...

This is where a lot of America is headed if something isn't done soon.

Laura

The dumbass agencies issue a 'warning' to consumers? WTF is that all about. If it's a damned ripoff close the bastards down, don't just issue an unheard warning and call it good. Worthless regulators.

we're better off fending for ourselves, rather than try to get help from the "helpful" "non-profit" agencies. I heard on the radio that Ameridebt is now in Chapter 11 (can you believe that!) because it misled people who came in for help. They claimed they were a non-profit organization, when they in fact were a for profit corporation.
So much for help.

Jeez Dav, that's an ugly photo.

He's a rat and he's evil. I figured it was appropriate! :)

Laura

Let's say the payments on only one of your cards are a problem. Any debt agency is going to require you to stop using all of your cards to get relief.

to try to salvage something for the creditors who would normally be victims of bankruptcy losses. Their purpose is not to benefit the consumer. If you go with their plan, your credit still gets ruined because you didn't comply with your original credit terms, and I have heard that the results are about the same on your credit file either way you go. Only you don't get the "wipe the slate clean" relief that bankruptcy provides.