Consolidated Credit Counseling – Some Advice

Maxing out your credit cards in a troubled economy is all too easy, especially when you are forced into using credit for things you never would have thought of before. Perhaps your spouse has accused you of becoming a shopaholic because when the bills come in there are pages and pages of new charges. But in reality all you’re doing is buying groceries, an occasional cup of coffee on the way to work, and maybe even finding the need to pay other bills with a credit card. If you are seriously thinking of some counseling, check out consolidated credit counselling services, but watch out for scams.

Consolidating credit is just that – all your monthly bills (except your rent or mortgage) are wrapped into one payment which should be significantly lower than what you had been paying. Many pros and cons exist, but if your other option is to declare bankruptcy you may have no other choice.

First, check out some local non profit agencies that specialize in this kind of credit counseling. Many companies exist, especially online. Do your research, though. The thought of having all your bills lowered and consolidated is sometimes such a driving force that many consumers end up signing on with companies that do thing more than cause further problems.

The industry is rife with scams, especially with online companies. Many of these companies have very detailed and professional looking websites making consumers believe these companies offer valid and viable services. They usually have the usual disclaimers, a detailed application form, and even an address and phone number to add to their alleged legitimacy.

But their entire purpose is to do nothing more than get your money. They have you fill out an application, they wait a day or so to get back to you, and most of your communications will probably be via email. You are promised that they will contact your credit card companies to see what they can do, and they then ask you to sign some very legal looking documents which include instructions on where to send your new lower monthly payment, which is to them.

Your assumption of course is that your monthly payment to them will be appropriately dispersed to your creditors with whom this credit agency has supposedly been negotiating regarding lowering your payments. The truth is that this company hasn’t done a thing for you! No one has called your creditors, and no one has paid your bills. And by the time you find this out and start asking questions, the company has changed websites and names and can’t be tracked down.

You find out what has happened only because your creditors start calling wondering why you haven’t paid your bill! Then you discover they have never been contacted by any company acting on your behalf in order to reduce your payments.

On top of that, you are now being penalized with a higher APR because you have defaulted! Be careful who you ask for help!

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