Credit Counseling

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You’re in debt and struggling to pay what you owe. You’ve heard there are tax-exempt credit counseling services that can help you manage your finances.

Beware! Not all of these organizations are legitimate. In October, the Internal Revenue Service, Federal Trade Commission (FTC) and state regulators issued a consumer alert about certain tax-exempt credit counseling operations. And in November, the FTC initiated a lawsuit against a national organization. Of concern are companies that use tax exempt status to get around consumer protection laws, then take advantage of you by offering “quick fixes” to your financial problems.

Here are tips for protecting yourself from a possible scam.

  • Make a list of the services in your area. Then check with your local Better Business Bureau to find out if any of them have complaints on record.
  • Call the services and ask how they’ll go about helping you. Are they courteous? What are the fees? The FTC provides a more detailed list of questions to ask. Make sure you’re comfortable with an organization before you set up an appointment.
  • Once you’ve selected the company you plan to work with, READ the contract. NEVER sign an agreement until you read the fine print. If you don’t understand the contract, contact your state bar association. They may be able to provide the name of a lawyer who will agree to a brief, free consultation.
  • If you set up a payment schedule with the counseling service, take time to contact the businesses you owe money to. Make sure they’re being paid according to schedule.

Believe you’re a victim of credit counseling fraud? File a complaint with the FTC online at:, or call their toll free number: 1-877-FTC-HELP.

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