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Consumers Advised to Seek Debt Management Help from the Right People

By Faye Mergel
Published: Monday, November 16th, 2009

Many consumers say they feel desperate when their debts get out of control. But experts tell them that seeking help from the wrong people could only add more trouble to their financial lives. Additionally, it can ruin the credit score of people once the so-called debt management professionals are not able to fulfill their promise. Specialists cited a case that is currently pending in the state of Illinois as an example why consumers must be very careful when seeking help as they try to solve their debt management problems.

Consumers Advised to Seek Debt Management Help from the Right PeopleIllinois Attorney General Lisa Mandigan told the public this week that she is pushing for a lawsuit against a telemarketing company that was reported to have scammed debt-trouble consumers. Reports revealed that the company promised to lower credit card rates in exchange for expensive fees from unsuspecting clients.

Mandigan said it is only natural for consumers to seek help that would ease their financial burdens during these tough economic times but she warned consumers to not to be too trustful to solicitors who promise immediate solutions to their debt problems. She added that in most cases, consumers never really got the help that they needed. Worse, they are left with more financial troubles than they had before.

The telemarketing company awaiting trial at an Illinois district court is accused of collecting upfront setup fees that are as high as $1,590, promising clients that they can negotiate with card issuers to reduce rates. Consumers who fell victim reported that they did not get the papers for the terms and conditions until they were able to meet the fees. The report also reveals that clients had difficulty in getting a refund after the lower rates did not come. Some were not able to get theirs.

Specialists say aside from requiring high fees, debt negotiators do consumers more harm by ruining their credit score. They explained that such companies offer bogus advices which do not really help consumers out of their problems.

Experts note that debt negotiators tell clients to stop making payments to their creditors since they are currently on negotiation. But this only makes them end up with more debts than before. It also reduces a consumer’s chances of getting better loans in the future since unpaid bills could severely hurt their credit score.

Consumers are strongly advised to avoid dealing with companies that require fees even if they have not fulfilled their promises yet. Specialists say companies that make unrealistic promises such as making debts disappear entirely are almost certainly a scam. They advise consumers to talk with their creditors personally when having trouble meeting their payments.

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