Debt management programmes
Years ago, there was a TV commercial that I saw repeatedly. It was a pretty silly commercial – a sad one in its own way, but also a harbinger of things to come. The commercial featured a woman getting a phone call from her bank and being told she was behind on her payments. You could see the woman cringe and hold her forehead in that over acted way that showed she was trying to seem like she had the weight of the world on her hands. She apologised and said that she “just got a little behind.” Then the voice on the phone said that she had been making minimum payments and now none at all. This is answered by an explanation that things have been tough for our poor character. She lost her job, or she got divorced. I don’t remember exactly what it was, but you get the idea. Then she was told about some debt relief programmes which she could use to lower her bills. This by the guy who was calling to tell her she owed money.
It was of course from some company that was trying to sell a debt management plan. At the time, these were still fairly unusual. The idea was (and still is) that you would turn over all your credit card bills to this company, they would negotiate on your behalf and get you a better deal and lower payments. I remember one such company saying how “we can get the creditors off your back.” Now, you have to remember that all this was back when the economy was booming and the Great Recession was something no one could have imagined would occur. Today, there are thousands upon thousands of debt management companies who offer to help you through debt counselling. They all have the same basic concept behind them, that they will negotiate on your behalf. The trouble is that whenever there are desperate people, con men will move in alongside them and try to steal what little they have. These vultures will basically prey on the weak and try to get you to “sign up” with them, charging upfront fees sometimes as much as $1,000 and promising to take care of everything.
People scrape the money together to pay them, thinking the nightmare is over. But it isn’t. The nightmare is just beginning. These guys will take your sign up fee plus any other money they can milk from you and whistle all the way to the bank. By the time you realize you’ve been ripped off, it’s too late. They’ve closed up shop and moved on to the next mark. So how can you be sure to avoid such scams? It’s really not that hard. Just do what you would do if you were hiring someone for your business. Google them. Put the name of the company into Google together with the word scam and see what comes up. If they’re legit, the name will not get hits for scams. However, if you see people complaining about having been shammed before, watch out. You’re their next mark and you can’t afford to be wrong. This is your life and your credit after-all. No matter how much they sounded sincere, just move on to the next place. There are enough legitimate places to get debt counselling that you don’t need to hire any bogus debt management companies.