How can I protect myself when resolving debt issues?

Protecting yourself when dealing with debt issues

Other than self-help options, all debt management programs – credit counseling, debt negotiation, and debt consolidation – require that a consumer divulge personal financial information to a third party. This is why it is important for the consumer to understand:

• What services are offered and what aren’t
• What fees and expenses are charged, why, and where the funds go
• Who the financial professional or organization is, including information about education and certifications
• What federal, state, and local agencies have to say about the credit program.

To find a reputable agency, and reputable debt consolidation advice, consumers should check with local banks or consumer protection agencies for advice. Or check with local universities, credit unions, housing authorities, or military bases – sometimes they have debt management and credit counseling services and if not, they can often recommend one.

Consumers should stay away from debt management agencies or professionals that:

• Charge high up-front or monthly fees just for signing up
• Pressure consumers to make "voluntary contributions," which are really just disguised fees
• Won’t provide free information about the service or require personal financial information to do so
• Don’t spend time reviewing a consumer’s financial situation before making recommendations
• Fail to teach consumers money management and budget skills.