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People across the country are finding that they have used their credit unwisely and owe creditors a great amount of money that is increasing every day because of the interest charged to the account.  As they search for a solution to their financial problems, many people contact credit counseling companies that promise to repair their credit and give them a clean slate to start fresh.  Over the last several years, companies that scam people have become experts at taking advantage of people in difficult financial situations, but there are some clues that will tell you whether the company can really help you or whether the company is out to steal the money that you have left. 

By keeping these warning signs in mind, you will reduce the risk of being taken advantage of by a dishonest credit counseling company.

Telling You That There Are Invalid Clauses In The Credit Agreement

Some credit counseling services say their customers have charges, interest payments, or fees on their credit account that cannot be collected legally by the credit card company.  They may also tell the customer that there are clauses in their credit agreement that are not legally valid and that can work in their favor to make the entire total of the credit account illegal for collection.  In nearly all of these cases, the information that the company is giving the customer is incorrect and the total amount of the account is collectible under the laws of every state.

The way that this scam works is that the company will charge the customer a fee, often hundreds of dollars, for contacting the credit card company on behalf of the customer and alerting them that the debt is uncollectible.  After some time has gone by, the company will tell the customer that the creditor is discharging the debt or that they have filed a lawsuit against the creditor, which will require the payment of another fee.  People that fall for this scam will find themselves owing their creditors a significantly larger amount due to finance charges and late payment fees.  They may also find themselves sued by the creditor for the entire balance of the account for nonpayment. 

Offering To Create A New Credit Profile

Some credit counseling companies are offering to create a new credit profile for the person, wiping the slate clean so people with not have anything negative on their credit history and can apply for credit without being turned down.  This is typically accomplished by creating a fake social security number for the person and creating a new credit profile under their name with the new social security number.  This is illegal and if you are caught using this social security number, you could be prosecuted and sent to jail charge with a criminal felony and fraud charges. 

Although there are some credit counseling companies that can help a person reduce the amount of debt they are facing, many of the promises that are made by some of these companies make can lead to being sued by creditors, having criminal charges brought against the person, and spiraling deeper into debt.  The best solution is to contact one of the many government agencies offering free financial planning and following the advice that they give you, allowing you to repair your credit in a safe and legal way.