Debt counseling service goes by different names. Some call it credit counseling service or debt consolidation service. However you choose to call it, the service refers to an organization that provides financial help to people with poor credit rating and those who are in debt. It usually claims to be a non-profit entity, but before you start to feel blessed, thinking that you have found gold in the desert, here are some things you definitely want to know:
It’s true that most debt counseling companies are claiming to operate as not-for-profit, but most of them do not operate as a true nonprofit organization. They are not even tax-exempt under the American law.
You must have seen in advertisements that thousands of people had already benefited from the assistance provided by such service providers, but do you actually know of one who had? Surely, you can’t fully rely on advertisements or testimonials alone because for all you know they may be bloated and even paid for by the company itself.
Some ads may even mislead you into believing that the service is for free, but there can be no more free lunches in this age and time, and certainly not the services of a debt counseling firm! Perhaps, the only thing that is offered for free in this case is consultation which gives you the opportunity to present your debts and the company then sort of makes a promise to make you debt-free, but there’s a big if attached to that. The company will only help you if you avail yourself of its services which isn’t free at all. Some companies charge $5 or a flat rate of $39.95 a month.
It’s not true that debt counseling service providers have a special bond or rapport with the creditors, so if you think that they are better able to negotiate a good debt settlement in your behalf because of this so called special relationship, think again. What these providers usually do is simply to send out letters to your creditors, and these letters may not even be read by your creditors.
Before you hire the services of a debt counseling firm, do your research well in order for you to make an informed decision.
