Beware of Credit Counseling Scams

credit counselorsCredit counseling is a mandatory part of the bankruptcy process. You cannot file for bankruptcy in North Carolina without presenting a certificate that you have completed credit counseling. Sadly, individuals who are navigating bankruptcy get taken advantage of by fraudulent credit counselors.

A way to avoid credit counseling scams is to use an approved counseling agency listed by the Department of Justice. This will direct you to the latest Bankruptcy Administrators in North Carolina. There are three districts in North Carolina: Eastern, Western, and Middle. 

Approved credit counseling providers must complete an application process through each individual Bankruptcy Administration. You will need to pick the district in which you reside and complete the course there. Some credit counseling providers will request a monthly fee from you, and in return they will manage your outstanding debts by negotiating lower interest rates or removing late fees. This is called a Debt Management Plan (DMP).

DMPs are valid when completed by reputable credit counselors. Credit counseling scams, however, will usually encourage individuals to take advantage of DMPs instead of completing the required counseling courses. Some scams also operate on their own terms, which means they issue payments only one day per month and that day may consistently fall on a day that registers as a late payment on an individual's credit report--further adding to a person's credit problems. Another method used by scammers is giving the false impression an individual is simply filling out an application, when in reality the "applicant" is completing debit authorization forms so that the credit counseling scammer can withdraw funds as they wish.

Share this information with friends or family who are thinking about filing for bankruptcy in North Carolina. You may help them avoid unnecessary additional credit troubles.

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