FYI just poking around VERY INTERESTING....part 3

Posted by researching a collection company (66.90.199.107) on October 01, 2003 at 10:28:23:

Advice for Consumers

The report advised consumers to evaluate all of their options before entering credit counseling, including developing a better spending and savings plan, negotiating individually with their creditors and-in very serious situations-declaring bankruptcy. The groups also strongly recommended that consumers shop around for a good credit counseling agency.

"It is virtually impossible to distinguish the honest, caring agencies from the rip-off artists by just looking at a TV ad or making a quick phone call," said Plunkett. "Don't just respond to television or Internet ads. Get referrals from friends or family, find out which agencies have had complaints lodged against them and look at several agencies closely before making a decision."

The report offered consumers a number of tips on how to find quality credit counseling. It also cited seven "red flags" -- reasons to reject an agency and to look elsewhere for assistance:

1. High Fees. In general, if the set-up fee for a debt management plan (also known as debt consolidation) is more than $50 and monthly fees are more than $25, look for a better deal. Similarly, if the agency is vague or reluctant to talk about specific fees, go elsewhere.

2. "Voluntary" Fees that Aren't So Voluntary. Some agencies publicly claim that their fees are voluntary, but don't pass this information on to consumers. Others will tell you that their fees are voluntary, but will put a lot of pressure on you to pay the full fee, even if you can't afford it. Ask all agencies you contact if their fees are voluntary. If the full fee is too much, do not pay the agency more than you can afford.

3. The Hard Sell. If the person at the other end of the line is reading from a script and aggressively pushing debt "savings" or the possibility of a future "consolidation" loan, hang up.

4. Employees Paid by Commission. Most credit counseling agencies are non-profit organizations that are supposed to consider your best interests when offering you counseling options. Employees that receive commissions for placing consumers in debt management plans are more likely to be focusing on their own wallets than yours.

5. They Flunk the "Twenty Minute" Test. Any agency that offers you a debt management plan in less than twenty minutes hasn't spent enough time looking at your finances. An effective counseling session, whether on the phone or in-person, takes a significant amount of time, generally thirty to ninety minutes.

6. One Size Fits All. Some agencies are like a shoe store that sells just one type of shoe. The only choice they will offer you is a debt management plan. The agency should talk to you about whether a debt management plan is appropriate for you rather than assume that it is. If the agency doesn't offer any educational options, such as classes or budget counseling, consider one that does.

7. Aggressive Ads. Many agencies that advertise treat consumers fairly. However, some are being investigated or sued for deceptive practices. Many others charge unreasonable fees or offer no real counseling. Don't just respond to television and Internet advertising, or telemarketing calls. Get referrals from friends or family, find out which agencies have been subject to complaints and talk to a number of agencies before making a decision.

National Consumer Law Center is a non-profit organization specializing in consumer issues on behalf of low-income consumers. NCLC works with thousands of legal services, government and private attorneys, as well as community groups and organizations that represent low-income and elderly individuals on consumer issues.

Consumer Federation of America (CFA) is a non-profit association of almost 300 pro-consumer groups, with a combined membership of 50 million, which was founded in 1968 to advance the consumer interest through advocacy and education.

A copy of the report can be found at: http://www.consumerfed.org/credit_counseling_report.pdf.

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