Debt Consolidation Scams

Debt Consolidation Scams

This section is a warning about Debt Consolidation scams.

I have been working in the Credit Counseling/Debt Consolidation field for the past 10 years and so I consider myself a bit of an authority about this industry.

I no longer work in this industry for several reasons, the main reason being that I HATE IT!

I don’t trust these companies because I’ve seen how they operate and it’s not just you the potential client that they hurt–they also pray upon the needs of their employees.

These companies’ main concern is the number of sales per month that their counselors bring in;

it’s all heat and pressure.

If the employees don’t perform by pulling in a pre-set minimum amount of new accounts each month they are harassed or even fired.

I honestly feel that is why so many companies that started out trying to be honest have gradually turned into scams.

These people have to make their quotas or they lose their jobs, and in order to make those numbers the counselors become sneaky and misleading while speaking to their clients.

You are being “pitched”–I illustrate this statement with evidence, please see our page detailing a Debt Consolidation Script. This is an actual script that I’ve picked up along the way. This particular script is currently being used in two different Debt Consolidation companies. This is nothing; I’ve seen worse.

I personally worked for a Debt Consolidation company where I was the Training Manager for a brief period of time. I don’t lie to people (and I still managed to make my quotas) and the owner of the company thought that I might be able to teach others how to “sell” honestly. Unfortunately, the number of sales went down significantly, so that position didn’t last long. Most people could not compete with the other Debt Consolidation companies that were also “pitching” our clients and who were not being honest with them. Who was giving the better deal to the already cash strapped client? Not the honest counselor. So we lost sales and management again turned a blind eye to what the counselors were saying on the phone.

As I said, most Debt Consolidation companies are nothing more than telemarketing companies disguised as legitimate business. Many owners of these companies have been involved in some sort of telemarketing business for years; Debt Consolidation is simply the telemarketing room flavor of the moment. Next year, they might be pitching vacation packages over the phone. Not only do the “Credit Counselors” have quotas to meet, they also work on commission and have a bonus structure. The more new accounts that they bring in the more money they can make.

Most scam Debt Consolidation companies hide behind a not-for-profit status. They count on people not fully understanding what that term means. In layman’s terms not for profit is nothing more than a tax status. It does not mean that they don’t charge for their services or make any money. On that note I need to also warn you about trusting the Better Business Bureau, the American Association of Debt Management Organizations (AADMO), the International Organization for Standardization (ISO) and British Standards (BSI) emblems that you will see posted proudly on many of their websites. There are ways around every rule and watchdog. Children always play nicely while the parents are watching, but as soon as the babysitter is in charge all hell breaks loose. Again, I’ve seen it, I know.

I would suggest that Better Business Bureau, ISO and BSI re-evaluate who they are granting their seal of approval to or perhaps keep better track of the companies that meet their high standards. They may find that the second they leave the building that conditions, practices and standards change radically in the offices that they certify, at least in this industry. It is my understanding that the members of the Credit Counseling industry (the owners of the Debt Consolidation companies!) formed AADMO so, well . . . you get the idea.

Please read my page called The Truth Behind Debt Consolidation Programs for more information about the actual mechanics of consolidating debt and what these companies are supposed to do. This page that you are now reading is a warning to others and a chance to get this off of my chest.

Keep in mind that there are some honest Debt Consolidation companies out there. Good luck determining who they are, though. It’s very hard to tell them apart. My advice to anyone who needs to get some help with their bills is to try to do it yourself. This website gives all sorts of tips and advice for everything from getting and reading credit reports to dealing with the creditors. Take this information with my blessing and if after you read it all and give it a shot on your own, if you still want to get some help you just let me know and I’ll help you get in touch with a reputable company.

If you decide to use a company that you find on your own you must check the company out first with both the State Attorney Generals Office and the Federal Trade Commission (FTC). You will find links to both of these offices in Katie’s Links under Government Programs and Consumer Awareness.

Oh yes, and be sure to read my link on the newest scam Christian Debt Consolidation Scams. This new racket is so despicable that I felt they deserved their own page.

One last note, to any Scam Debt Consolidation company that is angered by my words on this or any other page on this site: I say BRING IT ON! At that point I will be pleased to start naming names, and pulling out documents that I have saved for the last 10 years to verify all of the claims that I’ve made on this site.

One Comment

  1. Helpful Information says:

    Thank you for posting this information.

    You are so right. Someone (like me) with pay cuts because of the economic downturn the past few years and the outrageous acts of the credit card companies a few years ago (several of my cards went from 8-12% straight to 30% on MONEYS I ALREADY SPENT, and as a result of no wrongdoing on my part) does not have any extra dollars to be giving to these scamming companies.

    I have been searching for a way to get my debt down (I have very little, but it’s spread across 5 cards all running at about 30% interest, so with pay cuts AGAIN at my job and decreased medical benefits, I now cannot keep making the same payments to credit card companies that I could just a few years ago.

    In any case, from an ethical consumer (and someone who pays bills on time and meets my obligations), THANK YOU for this information! Best regards and good luck!

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