The Federal Trade Commission has information on dealing with debt on

its Website at


As an attorney, I have seen too many clients pay too much money to

companies which claim to be “credit counselors.”   There are things you

can do to ensure that you get good counseling at a reasonable price.


First of all, make sure that any credit counseling agency is a “non profit

corporation,” recognized by the Internal Revenue Service.  You can contact

the IRS, to determine if the service is recognized.


Second, use a credit counseling service with a local office.  In many

instances, people send money to an agency which is out of state, and

getting very little, if any help in return.  This reminds me of the Nigerian

scam, where you are promised millions, if you only send a small

processing fee of a few hundred dollars.


Third, the credit counseling service should be paid as you are paying off

the debt.  I will now describe what I call ripoff scene #1.

  1. A debt management company tells you that you should stop paying all of your unsecured debt
  2. The company tells you that you need to save money to pay off the debt.
  3. The company claims that they can get the creditor to take 10% to 25% of the amount owed.
  4. The company indicates that you need to save money to pay off the debt, at the reduced amount
  5. The company claims that you can put the money into a trust account which they will establish for you.


  1. The company makes most of its money up front, from the fees you are paying.  Often you will first pay the company $2,000 to $3,000, before any money goes into the trust account
  2. There is no guarantee that any creditor will accept 10% to 25% of the principal and interest due.
  3. The interest charges continue to grow, while you are not paying the creditor.
  4. If you have many creditors, some of the creditors are likely to sue you, before you have enough money in the escrow account, to cut a deal

With a reputable credit counseling agency, such as Money Management

International, you pay no up-front charges. The agency works out a

payment plan to pay off of the creditors.  Many of the creditors accept a

reduced interest rate, in exchange for regular payments.


A honest credit counseling agency will tell you that you need to file

bankruptcy, because you cannot afford to pay off your creditors.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518



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