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Watch out for warning signs
There are honest credit counseling agencies that provide user-friendly
services like flexible hours, easy access by telephone or Internet,
an easy electronic payment processes, classes and counseling.
But as the demand for credit counseling has increased, the nature
of these agencies has changed, and many credit counseling agencies
are fraudulent and deceptive.
Federal regulation of the credit counseling business is fairly
loose. State regulation is generally ineffective, and this type
of consumer service is not regulated at all in Florida and Maryland.
That means that you must be very cautious when engaging with a
credit counseling agency.
Here are some of the techniques used by some credit counseling
agencies use that are either unethical or even illegal:
Sometimes agencies apply the first monthly payment you make on
your debt management plan to their fees instead of making payments
to creditors, which results in late fees from creditors. Agencies
may not disclose this upfront.
Credit counseling agencies will not always pay your bills on time.
It's a good idea to check your monthly statements from creditors
to make sure the payments are being made as promised by the agency.
Some agencies won't follow through with their services, or may
take your money and not make your payments. You'll need to stay
on top of any agency you decide to work with.
How to report dishonest business practices by your credit counseling
agency
If during the course of your relationship with a credit counseling
agency you suspect a violation of the law, you can file a complaint
with the Federal Trade Commission (FTC). If they see a pattern
of complaints against the same agency, they will take action.
For help from the FTC, you can write:
Correspondence Branch
Federal Trade Commission
Washington D.C. 20580
Call: 1.877.382.4357 or TTY: 1.866.653.4261
Or visit them online at: http://www.FTC.org
Disclaimer: This information is provided by E-LOAN as a service
to the public. While our goal is to provide information that will
help consumers to manage their credit and debt, this information
should not be considered legal advice. Such advice must be specific
to the various circumstances of each person's situation, and the
general information provided on these pages should be used as
a substitute for the advice of competent legal counsel.
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