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
