Budget Right Debt Management ripoff Syosset New York

I have been in the lending industry for 18 years. Someone with a 760 fico score would not need to go to a CCC debt management plan to help them. If this person was in DEBT than the high credit to credit balance ratio would have hurt this person's fico score.

I don't know what this person's reason for trashing this company, remember everyone, this is AN OPINION website. These are not facts! It could be a competitor of this company who might have wrote this. Who knows? But most businesses like this do not exist to rip people off. FTC would be after them so fast if this was true!

The facts are quote contrary to the last response. The post is old, however, I worked in the "credit/debt counseling" industry and want to offer some inside tips.

MANY people that approach credit counselors have high credit scores and are not necessarily behind on payments. They are, however, struggling to make these payments and are attracted by the advertising tripe that their interest rates "will be lowered or eliminated".

The system typically works as such:

The customer approaches the credit counselor in response to the advertising. The "counselor" (read sales person) goes through a prepared script touting the benefits of the program. They claim they work with tens of thousands of creditors, they will lower or eliminate interest rates, late reports, late and overlimit fees, they won't damage your credit report.....blah blah blah. They typically require that you deduct your payment from your checking account monthly. Some will ask for an up front fee for setting the account up, others ask for a "voluntary donation" each month which they will pressure you to make. They will inform the customer to ignore any collection calls and letters, and NOT to pay the creditor directly.

Let's break the claims down into facts:

1. They work with thousands of creditors. - Most major creditors accept credit counseling payments as an extension of their collection arm. A customer that has approached a credit counselor generally knows they are in trouble and is a default risk. So yes, the creditors "work with them". It is better, after all to have someone else collect for you at a much lower cost than using your own personnel.

2. Lower interest rates, eliminate late and overlimit fees. This depends on the creditor. They will ASK all the creditors to do this. The creditor will review your account and make an individual decision based on their own criteria. Typically, creditors have set a specific interest rates for these accounts and your interest will be changed to that rate. In some cases it will be lower, in the case of good customers that were not late with the creditor it may actually be raised, in MANY cases you will see no change at all. Late/overlimit fees, again, depend on the creditor's policies. Many will change them, others will simply not.

3. Won't damage your credit. - It is up to the individual creditor whether or not an entry indicating an account is paid through credit counseling is entered on a report. The entry, in itself, may not ruin your credit score. Future creditors will view this entry as a negative. On a credit report credit counseling is a thin line away from bankruptcy.

The Facts: There are few if any written agreements between creditors and credit counselors as to how an individual customer's account will be decided in regard to interest rates/fees/late charges etc. You begin credit counseling, the counseling company mails or sends electronically a "proposal letter" providing your account information and requesting lower interest etc. The payment is based on a percentage of the balance you provided. The creditor reviews the proposal when they feel like it. Basically most creditors have only a few employees assigned to handle these acccounts and it may take weeks to review a proposal. Suprise - you provided the counselor one balance, the proposal took weeks to review, you are not yet enrolled, the balance increased, you made no payment, late fees were added - NOW your balance does not match the required credit couseliing payment - it is rejected and must be resubmitted with an increased payment. This is a vicious cycle that takes sometimes MONTHS to resolve before an acceptable payment is proposed.

All this time lates are appearing on your credit report. You are receiving collection letters you are told to ignore. Your credit is ruined, you are making payments to the credit counselor and becoming angry. They have sold you a program that is ineffective.

What most will not tell you. Each payment you make to most creditors nets the credit counselor a percentage of the payment in return for their services. As you see this is not much different from paying an in house collector and as you are also making a "voluntary donation" this is a win/win situation for the credit counselor. Therefore, despite any calls or letters you are receiving the credit counselor will tell you to ignore or refer the calls to them. It is in their interest to keep your account active as long as possible.

DON'T do anything you can't do yourself except take money from you that could have been used to pay down your debt.

NO ONE needs to contract any "fix my credit" outfit! You can do everything yourself to improve your credit score!

In the future, if something unexpected pops up, contact your creditors yourself to work things out before you become late with the payments.