Proceed With Caution

When debt starts getting overwhelming, it can be hard to know where to turn. Collection calls haunt you, your spouse is upset, your future looks grim and you want a solution now. The problem is, there’s no such thing as a quick fix.

Credit counseling, debt settlement and bankruptcy are three very different approaches to dealing with debt, each with their own pros and cons. However, debt settlement and bankruptcy can be very dangerous.

First, recognize that whether you are dealing with a credit counseling agency, a debt settlement agency or a bankruptcy lawyer, there are untrustworthy people and companies out there. They will smooth talk you with scripted answers to get their hands on your money. There are three things you should always do when considering a company or advisor:

1. Check the company’s complaint record on a reputable Consumer Reporting Agency website. You’ll see that some companies have less than 3 complaints, some have 500 and a few have more than 1000! This is an objective third party source that can give you a good look at a company’s trustworthiness.
2. Check out their licensing status. Different states require different levels of licensing. Even if your state requires none at all, such as Florida or North Carolina, find a company that is licensed in the most stringent states like New York and Michigan. For more information about licensing, click here.
3. Call the company and talk to them anonymously. If they won’t answer all your questions without getting your personal information, like name and phone number, it’s a warning sign: they want to pressure you into a sale. You should be able to work through your situation on your own terms and get good advice before you make any decisions.