How do I Choose Legitimate Debt Management Help?

Jessica Ellis
Jessica Ellis

In times of serious financial crisis, good debt management counseling can be the difference between the road to recovery and inescapable bankruptcy. Unfortunately, while many sources of debt management help are both useful and well-meaning, there are many shady financial companies looking to take advantage of their desperate clients. While prompt assistance can be a major factor in financial recovery, it is important to do proper research on any possible sources of debt management help before signing any contracts.

Woman posing
Woman posing

According to financial experts, one of the best and simplest ways to find legitimate debt management help is to examine the tax status of the company. Many debt management businesses operate under a non-profit status, meaning that they are not collecting dividends from profit, and may be more motivated to focus on debt assistance rather than sales. If a company will not provide a prospective client with evidence of their tax status, it may be a red flag. While not all for-profit debt management businesses are unscrupulous, experts suggest it is far easier to find a legitimate company if it has non-profit status.

In addition to tax status, another good way to judge the reliability of a debt management company is to examine its professional reputation and associations. Most legitimate companies are associated with national non-profit credit counseling agencies, such as the National Foundation of Credit Counseling in the United States. These organizations only admit and list companies that meet a series of rigorous standards, and can be an excellent resource for finding debt management help. To affirm the company's legitimacy, check with independent business ratings organizations, which typically grade a business based on its history.

Be wary of any unsolicited calls from debt management professionals. It is not uncommon for shady companies to research any notices of foreclosure in the local area, then contact the indebted homeowner. They may also buy lists of names of consumers with poor credit from credit agencies, in order to find candidates in need of debt management help. Reputable companies are very unlikely to cold-call potential clients.

While most debt management companies do charge for their services, reputable companies typically ask for low fees that are paid after the debt situation is resolved. Untrustworthy companies are much more likely to ask for upfront payments and high monthly fees, without having done any work first. Unscrupulous businesses may also press clients to sign a contract immediately, and may become hostile or evasive if the client asks for more time. In this situation, it is important to trust personal instincts, and run out of the room if necessary.

Jessica Ellis
Jessica Ellis

With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica is passionate about drama and film. She has many other interests, and enjoys learning and writing about a wide range of topics in her role as a wiseGEEK writer.

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