A debt management company refers to the third party that will help you get out of your credit problems through debt management. They will assign a debt counselor to help you achieve your debt relief goals.
While hiring a professional to assist you in getting out of your credit troubles, you need to realize that when it comes to money, scammers are always present. In order to keep you away from them, you have to know what you should expect from the right debt management company. Some of agencies pose as legitimate debt relief companies – only to run away with your cash reserves the first chance they get. It will leave you with your debts unpaid and your money to pay it off, gone.
To help keep you from getting scammed, here is a list of qualifications that you should look for in a debt management company.
First of all, you need to be wary of companies who charge upfront fees. This is the easiest and fastest way that they can run off with your money. The government strictly prohibits charging of these fees. You can read all about it in the Telemarketing Sales Rule (TSR) being implemented by the FTC or Federal Trade Commission. If you come across a company that does this, you can expect that they are scammers. No legitimate company will risk violating this law. You can report them to the FTC if they insist on getting you to pay upfront fees.
When you are searching for a debt management company, you also have to look at the organizations they are affiliated with. If they are part of any group or associated with a known organization, you can be assured that they are legit. Most of the organizations have specific requirements and training programs so it will be easy for you to expect what services will be offered to you.
A debt management company is also prohibited from misleading consumers so scrutinize their advertisements. If a debt management company promises to reduce your debt balance – they are not into debt management. This is what debt settlement will do for you. Debt management only promises to reduce your monthly payments – not your balance. You will still be required to pay off the whole amount that you owe. Also, while the debt counselor assigned to you will also try to lower your interest rate by negotiating with the creditor, this is not a guarantee. If you find this on their advertisements, you need to approach them with caution. This is another violation of the TSR – making false promises.
Lastly, you need to ask the company about how they will charge you. If they fail to provide you with one or they refuse to give you a breakdown of their charges, this is prohibited by the TSR. You also need to ask this to head off any hidden charges. If they ask money from you that is not on the list previously provided, then you can file a complaint against them through the FTC.
You need to be aware of the different debt relief laws so you are protected against abusive companies who can easily run away with your money.