July 31, 2013

I need help managing my debt

Dear Consumer Ed:

I was out of work for nine months and couldn't pay all of my bills.  My debts have really piled up and I need some help.  How can I find an honest credit counseling agency?  

Consumer Ed says:

A reputable credit counseling agency can be very helpful. Credit counselors can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. They can also renegotiate the terms of your credit agreements and arrange to pay off your debts. You are right to take care when choosing a debt management company, as not all of them are legitimate. Some may charge excessive fees, misrepresent what they will be able to accomplish, or not pay your creditors in a timely manner, thus actually worsening your debt problems and your credit score. The National Foundation for Credit Counseling can help you locate a reputable credit counseling/debt management service in your area. You can contact them at 800-388-2227 or at their website.  

Make sure you know your legal rights concerning debt management companies. Under Georgia's Debt Adjustment Act:

  • A debt adjuster may not charge you a fee of more than 7.5% of the amount you pay monthly for distribution to your creditors.
  • All funds received from a debtor, minus authorized fees, must be disbursed to creditors within 30 days.
  • A separate trust account must be maintained for your funds, along with certain insurance coverage, and audited annually.
  • Copies of these audits and insurance policies must be filed annually with the Georgia Attorney General's Consumer Protection Division.

Please report any violations to the Georgia Attorney General's Consumer Protection Division online, or by calling 404-651-8600.

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