Personal debt can easily get out of hand. Sometimes people need to rely on credit cards to get through a difficult period, and the balances can quickly balloon. In other cases, what seemed like a manageable amount of debt can suddenly become an unbearable burden after an unexpected job loss. One of the most common causes of bankruptcy is medical debt, which can skyrocket when you or a loved one have no choice but to undergo life-saving treatments. In all of these cases, the mounting debt can seem like a hurdle you will never overcome. Luckily, there are credit counseling services that can help. A reliable and honest credit counseling service offers practical advice and legal guidance to help you pay down your debt. Some may even negotiate with your debtors on your behalf. Unfortunately, debt relief is also a magnet for scammers and unscrupulous businesses who are happy to take large sums of money for little or no help.
What Not to Do
When it comes to debt relief, Dale recommends following the same advice as with any business: never hand over money in exchange for a promise. While some legitimate businesses do require down payments, you should at least have a written contract, and you should never fork over all or most of the money upfront. If you’re hiring someone to help you with your debt, no legitimate debt relief company will ask you for money upfront. Instead, most work on a fee basis, and they only charge you when and if they get results. You should never pay for debt relief until the service you hire has already succeeded in reducing or managing your debt.
Georgia law protects consumers from predatory debt relief companies. First, no debt adjuster may charge a fee greater than 7.5% of the amount of funds disbursed monthly to the creditors. Second, all funds (minus the fees) must be disbursed to creditors within 30 days of when they are received. The law also requires debt adjusters to keep your funds in a separate, insured account and regularly provide the state with paperwork to prove that they are following the laws.
If you’re worried about your debt but aren’t ready to turn to a professional debt adjuster, you can start with some non-profit services. Many non-profits offer some form of credit counseling, often based on your income or other factors. Credit unions and banks may also help. And there is always the option to pick up the phone and call your creditors directly. Most creditors would rather work with you than have you declare bankruptcy, and they may have established systems to help people who can’t make their payments.