How To Spot Credit Counseling Scams

Credit card debt in the U.S. is at nearly $1 trillion dollars. With credit card debt spiraling out of control, many are turning to credit counseling services for help in alleviating this debt. While many – even most – credit counseling services are legitimate, the increased need for counseling has sparked many unethical and even illegal practices among those looking to profit from the misfortune of others.

A Bankruptcy Attorney Can Help

Beware any credit ‘repair’ service offering to take negative information off your credit report, such as late payments or missed payments. Tampering with credit history is unethical and quite often illegal, and the repair shops know this. They are simply looking to make a buck, and are not to be trusted.

Those sorts of scammers are relatively easy to spot; harder are the credit counseling services which operate under the same name as legitimate companies, but have a hidden agenda of fees and high rates. The most prominent recent example is Ameridebt, an illegitimate service that was forced to shut down its debt management operation. It was shown that Ameridebt had taken upwards of $170 million from consumers in hidden fees, all while operating under the guise of a nonprofit organization working to eliminate consumer debt.

It can be a frightening labyrinth out there, but there is good news. A bankruptcy attorney will provide you with a list of approved, legitimate credit counseling services. These services will have been vetted by the courts and proven to be legitimate services with reasonable rates. Choosing the right credit counseling service can mean the difference between becoming debt-free and sinking under the weight of hidden fees.

This information should serve as a warning – consult with a bankruptcy attorney for a recommendation before making a credit counseling mistake.