How to Find Debt Advice That Won't Cost You More Money
Rising credit card delinquencies are pushing more Americans to seek debt help. Knowing where to turn can prevent costly mistakes.
More consumers are falling behind on credit card payments, raising the stakes for those seeking outside help to manage mounting balances. Financial counselors warn that not all debt advice services are created equal, and choosing the wrong one can leave borrowers deeper in the hole than when they started.
Some for-profit debt settlement companies charge substantial upfront or ongoing fees, which can erode whatever savings a consumer might have negotiated on the principal. In certain cases, advisers encourage clients to stop paying creditors entirely while funds accumulate in a settlement account — a strategy that damages credit scores and can trigger lawsuits from lenders before any deal is reached.
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Free or low-cost alternatives exist for borrowers who know where to look. Nonprofit credit counseling agencies, which are often affiliated with recognized industry bodies, typically offer debt management plans with reduced interest rates negotiated directly with creditors. These arrangements preserve credit standing far better than settlement schemes and carry far lower fees.
Consumers are advised to verify any debt counseling agency's credentials before sharing personal financial information or signing any agreement. Checking with state attorneys general offices or consumer protection agencies can reveal whether complaints have been filed against a particular firm. The bar for choosing a debt adviser should be high, given that a poor decision can compound an already difficult financial situation.
Continue reading at BBC News for a full breakdown of reputable debt advice resources and warning signs to watch for.
