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Credit Counseling Companies

Credit Counseling Companies

Credit counseling companies are not always what they appear to be. While
many credit counseling companies, both for profit and not for profit, are
very legitimate businesses with only the consumer’s best interest at
heart, some unscrupulous operators are giving that industry a bad name.
A few issues have arisen over the last couple of years that relate to the
actual status of some companies that claim to be not for profit, how
money they charge consumers, and who exactly pays the costs of some of
these firms. Credit counseling companies in a number of states have
drawn the attention of the Federal Trade Commission’s office which has so
far as to shut some of these businesses down completely and others have
been fined and threatened with similar action if they do not change some
of their practices. These charges have shone a new spotlight on a
segment of the financial services sector, which had been operating with
little attention, and out of control, according to some knowledgeable
observers and industry watchers.

Several credit counseling services that have been under the Federal Trade
Commission’s magnifying glass are the National Consumer Council which has
been masquerading as a not for profit agency while simply raking in
profits like they were going out of style. One of the most famous or
infamous amongst this group is Ameridebt that was shut down for
defrauding individual Americans who were seeking debt relief of millions
of dollars in hidden fees and charges. Other for profit companies
providing credit counseling have also been exposed as serving several
employers as they receive funding from the credit card industry to cover
all of their overhead costs. Not only is the money they receive from
client’s pure gravy but also a lot of observers are questioning their
loyalty to the people that they are in business to serve. Several class
action lawsuits are already winding their way through the court system on
this apparent conflict of interest.

Another major area of contention has arisen about the validity and
effectiveness of the whole credit counseling process on the credit rating
of the individual who goes through this process. There are a few flaws
in the current process that actually make it harder and longer to regain
your credit through this process than even through bankruptcy. If the
intention is to avoid bankruptcy shouldn’t credit counseling ameliorate
this situation rather than making it worse? There are plenty of great
credit counseling firms in the marketplace. Just be sure to do your
checking first because sometimes credit counseling companies are not what
they appear to be.


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