Phony Credit Counseling Scams – A Guest Blog by Mark Cravens – TheAntiScamDoctor.com

As a business ethics speaker and consultant, I am often writing here about “unethical behavior” and the consequences that follow.  And, from time to time I have the opportunity to interact with other professionals who share my passion for educating the public on issues of ethics, fraud and scams.  One such individual is known on the web as – theantiscamdoctor.com – my friend Mark Cravens.  From personal experience, Mark was forced to delve into the world of scams and fraud and has, over time, become a foremost expert in the field.  As such, I have invited Mark to be a guest blogger from time to time.  I hope that you enjoy his work!

Guest Blog by Mark Cravens:   antiscam-doctor2

Times are tough and more Americans than ever are finding themselves in financial trouble. People are losing jobs, homes and nest eggs as the economy continues its downward slide. Then, as if things weren’t bad enough, struggling debtors reaching out for help are becoming the target of scammers.

Scam artists have always had an affinity for the weakest and most vulnerable; in this type of scam they take advantage of the current economic situation to make money from the many desperate people trying to climb out from under a growing mountain of debt.

When someone finds they’re struggling or unable to pay their current bills they’re often advised to seek credit counseling. Legitimate credit counselors can help borrowers reduce and manage their debt but beware companies that claim they can rid you of your debts. These phony programs seem “too good to be true” because they are.

Scam No. 1–Debt Elimination:

Operators of these scams advertise on the Internet, TV, radio and in newspapers. Sometime they even hold seminars that guarantee they can eliminate, terminate or cancel debts, especially credit card obligations. Usually, you’re asked to pay an upfront “membership,” “donation,” or “service fee” which can range from several hundred to thousands of dollars.

Scammers claim they’ll cancel your debt using various schemes that could involve ‘secret laws’, illegal contracts and arbitration. In the end many victims wind up losing more than their upfront money; some become the victims of identity fraud while others are sued by the credit card companies for repayment. Those who are lured into these schemes often lose more money than they originally owed.

Scam No. 2–Debt Reduction

In this scam, credit ‘counselors’ claim they have special relationships with creditors that allow them to negotiate your debt and reduce the amount you owe by 50% or more.  You’re told to stop making payments to your credit card company and instead send the money to a debt management firm that will hold it in trust to pay creditors.

Meantime, while they’re working out new details of your debt, they tell you to “rest assured that calls from collection agencies will cease.” Unfortunately, the phone doesn’t stop ringing and collection efforts sometimes get even worse.  These plans are hoaxes and debts aren’t lessened.  Ultimately, some borrowers are forced to file for bankruptcy.

The Real Deal

Fortunately, there is some real help out there for people struggling to manage their debt. Trustworthy debt counselors do exist and can help stop collection calls and reduce interest rates and late and over-limit fees.  They can repair your credit score or reduce the amount of your debt.  They can help you with a budget and provide money management advice. Credit counselors can also help you pay down your debt through a repayment program that could reduce your monthly payments and other fees.

How to Find a Reputable Credit Counselor

Check the Yellow Pages and you’ll see there are all kinds of credit counselors out there. Shop around for a Certified Credit Analyst (and if you don’t feel comfortable with a particular agency trust your gut and look for someone else). Check with the National Federation of Credit Counselors (NFCC) for some excellent advice on finding a reputable credit counselor.

If you are hiring a credit repair company to assist you, make sure they are accredited, licensed with the state, and have been in business for at least five years.

Consider Bankruptcy

One final word – don’t believe all your debts are just going to “disappear.”  There are no “magic wands.” If restructuring your debt isn’t going to solve your problems and your current situation is out of control, consider talking with a bankruptcy attorney and discuss the possibility of filing a Chapter 13 (re-organization.) This won’t eliminate your debt but it can make it more affordable.  The stigma of bankruptcy will last no more than 3 years and can allow you to restore your credit faster than simply ignoring your debt.

Mark Cravens, aka the Anti-Scam Doctor, was a scam victim himself. He now works to help others spot and avoid scams. Get the Top 10 Investment Scams and take a free quiz at www.TheAntiScamDoctor.com

YOUR COMMENTS ARE WELCOME!

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One Response to Phony Credit Counseling Scams – A Guest Blog by Mark Cravens – TheAntiScamDoctor.com

  1. Rick says:

    I would recommend that anyone looking for debt reduction, credit counseling or debt settlement perform thorough research when choosing the company they want to work with. Look for BBB ratings and check if the company is a non profit.

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