Misleading Credit Counseling Ads
	General Rule. Don’t get taken by the advertising on television and radio about “non-profit” credit counseling firms which reduce your credit card bills and other debt. Through the use of a "Debt Management Plan." Instead, you will be cheated out of your money and be in worse shape. They are bill collectors which are supported by the credit card companies and mortgage lenders.

Misleading Credit Counseling Ads on Television and Radio

Most credit counseling companies are bill collectors. Most are sponsored by credit card companies. Their operating expenses are paid by credit card companies and mortgage lenders. Their job is to squeeze as much money out of you as they can get. Particularly, they want to get your exempt assets, such as retirement assets and house equity, which they cannot get unless you voluntarily give it to them.

Ask them how they get paid. Ask them where their operating expenses come from.

They also state that they will reduce your credit card bills and get you out of debt.

Some of these companies will ask you to sign up for a “Debt Management Plan (“DMP”).

A DMP is an idea that you will become debt-free within 12 to 24 months if you pay a fee of several hundred dollars per month to these companies. And while you are paying this big fee every month to them, you will learn that nothing is being paid to your creditors.

The truth is: You will still have to pay the debt. Often in a lump sum after you have missed several months of payments, or you will get sued for a court judgment and wage garnishment. And you will have wasted the money which you paid to them. The money which you paid will be eaten up in fees and outright fraud. It will not be credited toward the payment of your bills.

This is one of the biggest scams in America today.

Misleading Claims of Non-Profit Status

They advertise that they are non-profit companies which are in business to help you. The truth is, the IRS is now actively investigating and revoking the non-profit status of many of these companies. Most are affiliates of credit card companies.

Credit Reporting Problems

Credit card counseling affects your credit report similar to bankruptcy. Except that it can be worse, because that process can go on for months and years. And the late and unpaid payments and any debt forgiveness may continue to show on your credit report month after month.

In contrast, a bankruptcy is a known process which provides the most effective help to you.

Site Map