Do It Yourself Financial Plan
Do It Yourself Financial Plan
A respectable credit guidance agency may help you build a repayment program using your creditors and show you better money management techniques to avoid debt later on. But some credit advice services take advantage of people who tend to be financially vulnerable, so proceed cautiously.
The Federal Trade Commission Act prohibits “unfair or deceptive acts or practices” of credit restoration, debt consolidation or counseling agencies. Some states also provide laws that make it illegal for credit service organizations to claim to be able to improve credit ratings.
And in some states, consumer credit counseling services must register with the state Attorney General’s office and obtain a surety bond to do business.
Voluntary Certification and Accreditation – Do It Yourself Financial Plan
The National Foundation for Credit Counseling (NFCC) is an independent not-for-profit organization that creates voluntary requirements for consumer credit counseling agencies. The NFCC Council on Accreditation (COA) accredits over 4,000 credit advice packages that meet NFCC standards.
To become accredited by the NFCC, a consumer credit counseling agency must be recognized as non-profit by the IRS and possess the proper local business licenses. To earn NFCC certification, a consumer credit counseling program must also use adequate checks and balances to safeguard consumers, including:
- Auditing operating and trust accounts every year
- Offering consumer education programs
- Providing detailed reviews of consumers’ income and debts, and an assessment of how each consumer got into financial trouble, with a written action plan for reducing debt
- Disbursing funds to creditors at least twice a month, or sooner in emergencies
- Giving clients a financial statement at least once every three months
The Association of Independent Consumer Credit Counseling Agencies (AICCCA) is an additional national organization with similar standards.
You need to think twice before signing up with a credit advice agency that doesn’t belong to either of these voluntary organizations.
Warning Signs – Do It Yourself Financial Plan
What should tip you off that you could be dealing with a less-than-reputable program?
Be cautious about illegal fees, sometimes disguised as contributions. If the setup fees or monthly charges have become high, they will get rid of any gain you might have made against reduced finance charges, and you would bemore well off negotiating directly along with your creditors.
Another danger sign is usually outrageous claims to instantly repair your credit ratings. Credit rebuilding is a gradual process, and it is illegal to attempt to change your credit standing by constructing a new, false identity.
It’s also wise to beware of advance fee loan scams, where you’re asked to fork over money to acquire a promised loan. Underneath the FTC’s Telemarketing Sales Rule, no person can legitimately ask that you pay until you actually get a loan or credit. So be skeptical of any consolidation loan, get all the details in writing, and don’t give your bank card, bank-account or Social Security information over the telephone or on the web.
Educate Yourself – Do It Yourself Financial Plan
The most effective way to protect yourself against unscrupulous credit counselors is to:
- Check out the program’s reputation with your state Attorney General and local Better Business Bureau, and find out how long they’ve been in business
- Confirm with your creditors ahead of time that they will work with that particular company
- Understand exactly what services are offered, and whether those services address all of your debts
- Get the specifics of any monthly fees, and find out whether you’ll still be obligated to pay those fees whether or not you continue to participate in the program
- Get all promises in writing
- Read your written agreement carefully
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