To What Extent Can A Credit Counseling Agency Truly Help You?

By Author: Arond Devit
Total Articles: 14
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When debt hit us the worst way, we had no other way than taking respite in debt relief options as we cannot be an expert in everything. Thus at times we need to take assistance of a credit counseling company as well; however, the world of credit counseling and credit repair is full of scam artists. We need to keep in mind certain aspects and factors before considering any option offered by the credit counseling firms. Not every organization that claims to help you improve your credit is a bad one. There are organizations that actually want to help you, and they will charge a fair and reasonable rate. In fact, you might not pay anything out of pocket; the agency gets paid by your creditors. However, many of these businesses pose as nonprofit organizations, but profit is their main motivation.

In early 2006, the IRS revoked the tax-exempt status of many of these so-called nonprofits. On the other hand, a lot of so-called credit-repair agencies are just bankruptcy attorneys in disguise. There is nothing wrong with bankruptcy attorneys, as long as they identify themselves as such. Unfortunately, many of these attorneys get ...
... folks in the door with false advertising. They claim that “credit problems are no problem,” or that they can “wipe out your debts.” Not surprisingly, their expert opinion is often that you should just file for bankruptcy. Thus, beware of agencies that only want to put you into a debt-management program (DMP). A good agency will take a holistic approach to improving your financial life. The one-trick ponies are only interested in setting up a DMP so that they can collect fees. Speaking of fees, never pay one until you understand what you are getting. Another fact which you ought to keep in mind is that some credit-repair companies tempt you with the promise of a clean slate. Imagine starting over, shaking off the chains of your past credit problems.

Some organizations suggest that you can do this by creating a new identity. You apply for an Employer Identification Number (EIN) from the IRS, and use that in lieu of your Social Security Number. Because the EIN is a brand new number, your credit history is not attached to it. Of course, this is illegal, and breaking the law won't make your life any easier. Some credit-repair agencies should actually be called credit-damage agencies. They suggest that you play hardball with your lenders. These agencies suggest that, by failing to pay your bills (on purpose), you signal that you are out of money. You should do this even if you have the money to pay your bills. As a result, your creditors assume that you are on the brink of bankruptcy. This makes it easier for you to offer them less than you owe. They are more likely to accept the offer, figuring that something is better than nothing. Unfortunately, these tactics are more likely to damage your credit than to help you out. Knowing all these facts from the market one can opt to do the entire process by himself.

Aronddevit is a Journalist who writes on various Debt settlement and bankruptcy related financial articles.Get to know more about the related topics from http://www.bestdebtcare.com