ask questions and bypass debt management scams

In a debt management program, the debt management company works directly with you and your creditors in order to develop an affordable repayment plan for your unsecured debts. Each month, the debtor deposits a certain amount in a bank account as per the plan, which the debt management company in turn uses to pay the creditors.

Unfortunately, nowadays many scam debt management companies are emerging and it’s pretty easy for you to fall victim of a DMP scam. Since, more con players are engaging with every passing day, the odds are very high to fall into a DMP scam, sign up and paying for services you don’t really need.

Hence, the next time you reach out to a debt management company, make sure you ask these questions:

Question 1: Are you an accredited non-profit credit counseling agency?

If you are going for debt management, make sure you work with only a legitimate and non-profit credit counseling agency. Check with the IRS to find the non-profit status of the firm. See, if the company is a member of the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies since all the members are strictly required to maintain quality, financial and ethical standards. Also, find out if any complaints have been filed against the firm with your state’s attorney general’s office or the Better Business Bureau.

Question 2: Are your counselors certified?

Any credit counselor working with the company should be certified. This means that the particular counselor should have passed a certification course and sound understanding in areas like budgeting, credit, counseling, bankruptcy and consumer law.

Question 3: Do you offer information about your services for free?

Any legitimate credit counseling company should provide you with free, detailed information about their services. Avoid the company that denies to offer the same and asks for personal information like your income, credit card details and bank accounts.

Question 4: Do you offer other services apart from DMP?

A legitimate credit counseling company will offer many other programs like financial counseling and budgeting advice apart from debt management program to help debtors get out of debt. Beware of those counselors who recommend DMP as the only option without even knowing your particular condition.

Question 5: Will you teach me budgeting and money management skills?

As an integral part of the debt management plan or program, any agency should teach you basic money management and budgeting lessons. Avoid any agency that skips these lessons and takes you to the program straightway.

Question 6: What are your fees?

Many legitimate non-profit credit counseling agencies offer debt management services for fee. However, some charge a small fee depending on your condition - usually, an upfront fee (not more than $50) to set up the plan and a monthly administration fee of the same amount.

Question 7: Do I need to make payments even before my creditors agree to the program?

You should not make any payment until and unless you personally confirm that your creditors have agreed to the plan that the agency had reached out with.

Question 8: Which debts will be included in the DMP?

The credit counseling company should inform you in writing which debts will be covered and which not. Even before the commencement of the program, the agency should sign an agreement with you detailing everything they told you orally. If they avoid these, avoid them.

Question 9: Do you provide with detail account information every month?

Any credit counseling agency should provide you with monthly reports detailing the status of your accounts. Even if you are provided with the same, make periodical checks with your creditors to make sure they are getting paid.

Do you have any questions in mind? You can share it with our readers in the comments below.

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