A few years earlier, when my spouse and I were still dating, she explained to me that she owed about $10,000 in credit card financial obligation ranging from a Speigel card to a House Depot card. About 5 credit cards in all. She had actually simply relocated with me into my townhouse and I provided to hold down the fort, financially, so that she might pay off those charge card. When a pay cut at work required her to cut back on those payments and she will default on a couple of them, she decided to respond to among those TV or radio ads for credit counseling and financial obligation consolidation. You understand the ones, "We can work out with your lenders and lower your payments, blah, blah, blah ...". Issue was, she never told me that she was considering this. If she had, I would have assisted her to investigate these deals with her and we could have chosen a credible one. Rather, she picked one from the radio or TV (I honestly can't keep in mind the name of the business but I make sure they are still out there) and registered for their debt management program.

So then she paid off all those credit cards, right?

Well, not exactly. Firstly let me discuss one thing about how the debt management programs work. Most credit therapy companies will charge an established charge when you enlist. The scammers will charge an extremely high, non-refundable amount. In this manner, when they do not do what they promised, and you pull out of their program, they get to keep your registration cost. So anyhow, back to my other half's story. So as I was saying, she registered with this credit therapy company (even she can't remember the name, and she tossed out all the paperwork so we can't look it up, sorry!) and exercised a regular monthly payment strategy with them, about $250 per month. Once they get her payment each month, they will distribute the cash to the 5 financial institutions that she listed when she signed up. So when the first payment came due, she purchased a cash order and mailed it out. Tip, cash orders are very important due to the fact that if you send a personal check, now "they" have your banking info. Always utilize cash orders if you are in collection! If financial institutions or debt collection agency get hold of your banking information, (bank name, account number, branch) they will take it all in one lump sum, whether you are paying or not! I have actually seen it done to great individuals that were attempting to get their lives back in order.

So, my partner assumes that everything is going great, why should not she, right? Well, a couple of months into the program, my other half gets a telephone call from one of the lenders, asking why she has actually not made a payment to them in a couple of months. WHAT ??!! That's right, this financial institution had actually not gotten anything at all from the credit therapists. Not a single cent. It turns out that this credit therapy company liked to play favorites. And whatever lender ranked higher on their friend list, got paid first, after the credit counseling agency got their extra month-to-month "administrative fees".

So did she ever settle her credit cards?

I more than happy to state that "WE" lastly settled her cards. I was so frustrated with the method my debt relief company legit spouse had been treated by these people that were supposed to help, that I stepped in and helped her pay whatever off. It took a little while, and some luck (a couple of the creditors offered a lump sum settlement, which we right away got on) however we finally handled to pay whatever off.

So what's the moral of the story?

Moral of the story, be really cautious who you do service with! In this day and age it is extremely easy for some scam artist to establish a fancy site or run a radio advertisement promising "You can be debt free in just two weeks! Blah! Blah! Blah!"

If you are severe about credit therapy due to the fact that you believe that a financial obligation management program might benefit you, be very selective. Ask concerns! How much up front? Just how much every month? Do they get a percentage monthly? Do they pay every lender on your list every month? Do they pay on time?

If you are still not exactly sure, you can constantly contact your local Bbb to see if any complaints have been registered against the company. Or you can look for a reputable credit therapist at the National Structure For Credit Therapy's site,. Their website is also readily available in Spanish. Another excellent resource is the Association of Independent Customer Credit Counseling Agencies,, which provides national accreditation to the credit counseling companies.

I believed I would respond to a really typical question about credit therapy agencies here also, "Will credit therapy affect your credit report?" Regrettably, I can't say "Yes" or "No". It really depends upon the lender. Some financial institutions will really list you as paying on time (assuming you stay with the program), while others will report to the credit bureaus that your account is in "Credit Counseling". When brand-new creditors see the words "Credit Counseling", they will either shy away from extending new credit to you, or they will want to take a possibility on you because they appreciate the truth that you are on your way to getting your financial affairs in order. Every case is different. I can tell you that NOT paying your financial obligations WILL harm your credit history.

The final credit therapy companies your buddy or foe? You decide! Pick carefully and weigh your choices, and above all, buyer beware! Like anything else in life, if it sounds too good to be true, it most likely is!