Credit Counseling Archives | Bad Credit Online Magazine

Credit Counseling

February 25, 2006

Arizona debt consolidation company hurt consumers

Debt consolidation is not the best way of debt relief, by far. You consolidate the debt and then what? You end up paying high fees and ruin your credit even further. As we said before it is debt consolidation, period.

Now Arizona officials are after debt consolidation company MMG, which after many complaints is asked to refund money.

Posted at 12:56 AM

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January 05, 2006

Credit counseling and debt management

We warned you it will happen, with new bankruptcy law, credit counseling and debt management will be pushed down to your throats. All you will get is more expenses, but no real debt relief. And we repeat, do it yourself, all needed is a little of financial planning and discipline. If you need a lot, get psychiatric help, not credit counseling one.

See these pages to help yourself:

- Become debt free
- Free debt consolidation with mortgage cash out refinance
- Using home equity line of credit
- Bad credit mortgage refinance - what are the options
- Bad credit home equity loan - can you get one and what to do about it
- Debt negotiation, debt settlement, debt reduction - what's behind these loud names - get the substance where it is possible.

Posted at 12:55 PM

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November 07, 2005

Massachusetts credit counseling agency fined $4.2 million

Cambridge Credit Counseling, a Massachusetts credit counseling agency was found guilty in misleading thousands of its clients and transferring several millions of dollars to "for profit" companies that belong to the same owners. The company owners must pay $4.2 million in penalties.

Cambridge Credit Counseling can now charge maximum of $75 to enroll in credit counseling, plus a monthly at the maximum of 10 percent of monthly payments, capped at $50. Before the lawsuit, Cambridge charged an up-front fee equal to one month’s payment, on average was around $300.

Posted at 01:44 PM

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October 25, 2005

National Foundation for Credit Counseling (NFCC) lists approved credit counseling agencies

The Credit Counseling Agencies are divided on two categories, pre-filing counseling and pre-discharge education.

Posted at 10:45 AM

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September 28, 2005

Non-profit Credit Counseling - how much is no profit?

We already know that AmeriDebt, the non-profit credit counseling services firm is under federal investigation ... but don't you ever wonder how credit counseling businesses got to be non-profit in the first place...? Must be in error...
Here's just another example of how 'non-profit' these services really are. "Investigators say the founder of the credit counseling firm AmeriDebt has tried to hide millions of dollars, even though a federal judge froze his assets earlier this year." Apparently, firm founder Andris Pukke has his assets in a Belize shrimp farm. He also has a stake in a Belize development company. In addition, he supposedly paid big insurance premiums to offshore companies "that may have ultimately been transferred back to him". And he was quiet about all this...
I especially like this accusation by a Federal Trade Commission: "FTC alleges that AmeriDebt charged hidden upfront costs and convinced customers the money was being used to pay down their debts." In reality, it was used on shrimp...

Posted at 05:17 PM

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September 20, 2005

Credit Counseling firm AmeriDebt's Michael Kiefer settles allegations

Michael Kiefer, a former AmeriDebt official denies allegations but agrees to pay Maryland $235,000 to avoid years of expensive litigation. Maryland Attorney General alleged that Michael Kiefer misrepresented AmeriDebt's debt management plans by saying they would help consumers' credit, when in fact they could hurt it.

The Washington Post goes on into more detail in their article - Credit Counseling allegations settled.
It also sheds some light on what's going on in the industry. What we've found the most interesting is the fact that "Consumer complaints about AmeriDebt prompted the Internal Revenue Service to investigate more than 60 nonprofit credit-counseling firms for possible misuse of their tax-exempt status for the benefit of their owners. So far, the agency has revoked the tax status of at least four firms and is challenging many others. ... Pukke [the founder of AmeriDebt and DebtWorks] has been sued by the FTC and the IRS, which is seeking more than $300 million in taxes and penalties."

Here's an idea... Revoke the tax-exempt status from all Credit Counseling firms and make them to back-pay tax. I'm sure there won't be too many people against it, and the money can be used to pay for Katrina damages and to reduce our budget deficit.

Posted at 01:57 PM

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September 12, 2005

Credit counseling will become more popular with bankruptcy law changes

Chapter 7 bankruptcy will be mission-impossible if you are working. I guess some people will lose their jobs, go for Chapter 7 and then re enter work force. Just kidding, of course, but for some folks out there it won't be a joke. So credit counseling will become a more popular option. That is my guess and it is as good as any, but will see in the short time. Meanwhile I would recommend anyone who considers even remotely entering into credit counseling agreement, to read the small print very carefully and ask certain questions about the fees you are expected to pay.
One thing credit counseling companies often claim is that they are non profit. Sure they make a little money one way or the other, but don't get ripped off. Check about any third party fees that you may be asked to pay. You don't have to pay any. Look for another credit counselor. And always check with Better Business Bureau.

Posted at 02:34 PM

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July 24, 2005

Debt consolidation or credit-counseling will be required before filing bankruptcy

In just three months new bankruptcy law will go into full gear. Among other things this law requires consumers that want to declare bankruptcy to consult with nonprofit credit counseling agencies.

According to Seattle Times there are several issues with this requirement.

One big issue is allegations of fraud in the credit counseling industry. Over the recent years there have been several cases when credit counseling companies had to pay huge fines for ripping consumers off.

Another is worry about Internal Revenue Service. IRS has been watching credit counseling companies that claim non for profit status very closely.

One of the largest outfits, AmeriDebt was shut down after the FTC accused it of claiming to be a nonprofit and taking $170 million in hidden fees.

Three others - National Consumer Council, Debt Management Foundation Services and Better Budget Financial Services — went out of business.

Posted at 11:32 PM

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July 13, 2005

Credit counseling agencies must be approved by the

Executive Office for U.S. Trustees. This resulted from the Bankruptcy Reform Act adopted earlier this year.

This act among other things, requires someone who would like to declare a bankruptcy, enter a mandatory credit counseling. Only those credit counseling outfits that are approved by the government will have the right to counsel you.

Sort of a preferred vendor list, but for your protection ...
And those credit counseling agencies must be not for profit.

Posted at 12:46 AM

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July 07, 2005

Obligatory Credit Counseling ?

Since the Congress passed new Bankruptcy law, those folks who intend declaring Chapter 7 or 13 have to get some credit counseling before hand.
But how do they know which credit counseling outfit is legitimate?
Business Week have some thoughts about it.

We recommend these pages as well:

Consumer Credit Counseling - General FAQ's
Credit Counseling - Questions about Debt Management Program
Credit Counseling - Questions about Bankruptcy
Credit Counseling - Questions about Credit
Credit Counseling - Family Service
Credit Counseling - Non-Profit
Credit Counseling - Credit Counseling Service or Agency

Posted at 03:12 PM

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