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Damage Control
Turning to a business that
offers help in solving debt problems may seem like a reasonable solution when
your bills become unmanageable. Be cautious. Before you do business with any
company, check it out with your local consumer protection agency or the Better
Business Bureau in the company's location.
Some businesses that offer debt counseling and reorganization plans may charge
high fees and fail to follow through on the services they sell. Others may
misrepresent the terms of a debt consolidation loan, failing either to explain
certain costs or to mention that you're signing over your home as collateral.
Businesses advertising voluntary debt reorganization plans may not explain that
the plan is a Chapter 13 bankruptcy, tell you everything that's involved, or
help you through what can be a complex and lengthy legal process.
In addition, some companies guarantee you a loan if you pay a fee in advance.
The fee may range from $100 to several hundred dollars. Resist the temptation to
follow up on advance-fee loan guarantees. They may be illegal. Many legitimate
creditors offer extensions of credit through telemarketing and require an
application or appraisal fee in advance. But legitimate creditors never
guarantee that the consumer will get the loan-or even represent that it is
likely. Under the federal Telemarketing Sales Rule, a seller or telemarketer who
guarantees or represents a high likelihood of your getting a loan or some other
extension of credit may not ask for or receive payment until you've received the
loan.
You should also avoid credit repair clinics. Companies coast to coast appeal to
consumers with poor credit histories, promising to clean up credit reports for a
fee. They don't deliver. What's more, they can't deliver: They can't do anything
for you that you can't do for yourself. After you pay them hundreds-or even
thousands-of dollars in up-front fees, they can do nothing to improve your
credit report. Indeed, many simply vanish with your money. Only time and a
conscientious effort to repay your debts will improve your credit report.
If you're thinking about getting help to stabilize your financial situation, be
cautious.
- Find out what services the
business provides and what it costs.
- Don't rely on oral
promises. Get everything in writing.
- Check out any company with
your local consumer protection office and the Better Business Bureau in the
company's location. They may be able to tell you whether other consumers
have registered complaints about the business.
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