How to Avoid Shady Debt Management Consultants

Debt management consultants are supposed to help people out of debt. Typically, they work for debt management organizations which offer debt management plans, or DMPs. Under the DMPs consultants contact creditors on people’s behalf to lower interest rates or monthly payments or reduce debts. When everything goes as planned, individuals make monthly payments into accounts set up with the debt management organizations. The organizations or debt management consultants make the payments to creditors. Unfortunately, that doesn’t always happen because of debt management scams. However, there are ways to avoid the scams.

Avoid Debt Management Consultants Who Contact Them

Often times, debt management consultants can appear when people need them the most. The may send letters offering help or contact people via email or telephone. Unfortunately, the consultants and the organizations may be scams.

Don’t Consider Debt Management Consultants Who Won’t Send Information

Consultants who won’t send additional or free information that individuals’ request by be shady. According to the U.S. Federal Trade Commission (FTC), individuals should be wary of anyone who won’t sent free information about their services without receiving personal financial information such as credit card account numbers and balances.

Investigate the Debt Management Organizations

Check with local better business bureaus about the organizations to see if they are creditable. Also, people should look at the organizations website. However, people should be suspicious, according to Nolo, if non-profit debt management organizations showcase a badge of trustworthiness. They may be trying to attract customers with false clams while funneling unreasonably high fees to for profit companies they work with.

Never Sign Up With Debt Management Consultants Who Don’t Do Their Jobs

Debt management consultants are supposed meet with clients and go over their current financial situations with them. Most importantly, consultants should explain the various options—including any debt management plans—available to individuals. Also, individuals should beware of any consultants who want to enroll them into plans without teaching them skills such as how to budget or manage their money better in the future.

Stay Away From Consultants Charging High Fees

Granted, debt management consultants charge fees to set up accounts, enroll in the plans and monthly fees. However, these fees shouldn’t excessively high.

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