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Credit Counseling Agencies Are Still Fraught With Corruption
By: Talbert Williams
The recently passed Bankruptcy Abuse and Consumer Protection Act requires, as a
condition of filing for bankruptcy, that all debtors first meet with an approved
credit counseling agency. This is designed to ensure that all debtors receive
some sound advice regarding money management so that they can avoid having to
file for bankruptcy again in the future.
The more you know about anything, the better you will be able to deal with any
problems that may arise, and it’s no different with personal debt. The US
Trustees office approves the agencies, and one would think that by doing so they
have eliminated all of the disreputable credit counseling agencies from the mix.
It may not be so, and consumers with problem debt may still be at risk.
The Salt Lake Tribune recently reported that one agency that has been approved
by the US Trustees to do business in Utah does not currently meet Utah state
requirements for doing business in that state. Utah has moderately strict
requirements for such businesses, including posting $100,000 bond and a simple
filing to register to do business in the state.
How odd the Federal government would approve an agency that hadn’t even bothered
to file a simple form to do business in the state! Another agency that was
recently approved by the Trustees is now under investigation by Utah officials
after numerous complaints from consumers that the agency in question took their
money but failed to actually submit any of it to creditors.
As we have pointed out before, the credit counseling industry is one that is
full of fraud. People go to these agencies in desperation, seeking a way to
avoid losing everything they have. The agencies, in turn, see an opportunity to
obtain fees from the consumers as well as a settlement from the creditors, who
share a portion of collected funds with the agencies.
It’s a rare business opportunity to “double dip” and get money from both sides.
In that regard, these agencies are not much different from bookies, who get
money from both winners and losers on a bet.
The problem is that many such agencies aren’t content with that arrangement and
would rather just keep most or all of the money paid to them by their clients.
This gets them in hot water with regulators and puts their customers in even
deeper trouble with the creditors to whom they owe money.
It would appear that the government isn’t being all that thorough with their
screening process for “approved” agencies, so it’s still very much a “buyer
beware” situation for consumers. Your best bet remains to talk to those who have
already met with any agency you are considering.
Find former customers and talk to them. Find out if they have had a good
experience and take that into consideration before handing over you money to an
agency with which you aren’t familiar.
About the Author:
Talbert Williams offers debt consolidation, debt reduction, credit card debt
referrals and advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site: http://www.1debtfreedom.com
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