How To Avoid Illegal Debt Management Services


Consumers who accumulate large amounts of debt may try various services to help rectify their financial situations. One service consumers find helpful is a debt management plan. A debt management company usually collects a lump sum payment from the debtor and uses the funds to pay the debtor’s lenders. This type of program can make payment easier for the debtor and reduce some of the associated fees. However, the consumer must be careful to choose a reputable firm that has a history of performing legitimate transactions. Some debt management companies perform illegal transactions and they are not legitimate. The following is information on how consumer can avoid illegal debt management services:

Checking the Better Business Bureau

A debtor can tell if a firm is reliable by searching for information on the company at the Better Business Bureau website. The website should have a listing of the firm as well as a grade given by consumers. If any consumers have complaints about the way an organization has conducted itself, they will also be listed on the site. Checking with the BBB is an excellent way to get some first-hand information about a debt management company’s practices from consumers.

Researching the Company

Debtors should always search for companies that have been in practice for many years. A new debt management company may not have enough history for the consumer to make a sound decision. Usually, a debtor can find information on a company and its business practices on the home page of its website. Additionally, the individual may want to search the internet for any other relevant information about the company. He or she should pay close attention to consumer reviews and tenure. It is always safer to choose a debt management company that has been around the block a few times.

Asking Questions

Availability and information are two of the top elements a good debt management company should have. Before dealing with any company, the debtor should call or stop by in person to ask questions. The person should ask about the additional services the company offers. A professional debt management firm should offer credit counseling service and budgeting help as well as debt management. Additionally, the firm should be able to provide the debtor with an outline of how it intends to solve his or her problems. Any organization that withholds this information or is not available for questioning may conduct illegal practices.

Read Everything Thoroughly

Even a debt management that sounds like a dream come true could be shady. Consumers should never sign documents unless they read them thoroughly and ask questions as they arise. Additionally, the debtor can take an extra step by having an attorney review the debt management documents. A lawyer can understand the jargon in the contract. He or she can advise the debtor on whether to continue with signing with the company. It is each consumer’s right to have any legal documents reviewed by an attorney.

Follow up on Services

Finally, when a debtor has finally chosen a reputable company to work with, he or she should follow up on the services for a few months after they begin. It would be beneficial for the debtor to call the creditors and ask if they agreed to the proposed payment plan. The debtor should also read his or her statements thoroughly and make sure the debt management company has made the payments they promised to make. Additionally, the consumer should obtain a copy of his or her credit report to see if his or her rating has improved any since the debt management plan went into effect.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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