A nonsensical press release just out by Debt Consolidation USA warning consumers about credit counseling seems odd to say the least.
Let’s go with the assumption the reason for this release was just to try and score some SEO points or something like that. The release refers to an article on their website titled “Reasons to Avoid Credit Counseling.” – Source
Now normally I would probably not report on this and let it slide but when the press release begins with the statement Debt Consolidation USA is “the leading online resource of debt information” I have to talk about this.
Surely a “leading online resource” who intimately know the issues surrounding the different debt solutions.
The press release is promoting a recently article on the Debt Consolidation USA website. In that article the following points are made about why you should avoid credit counseling.
“When you start credit counseling you may be locking yourself into a situation that will have a negative impact on your very important credit score.”
“If you do not avoid credit counseling then when they start negotiate with your creditors it can be noted that you are using a credit counseling service and this may signal to your creditors and future credit providers that you are a higher risk.”
“Credit counseling services charge fees and these fees are payable no matter how favorable an outcome they have been able to help you negotiate.”
“The main tool of many services is to put together a budget that can be very difficult to stick with.”
“The success rate is very low. In many of these counseling programs the highest priority is to sign up people and process them as fast as possible to start earning there fees. The structure is very rigid and the solution does not take into account other possible pathways. The proposition is sold to the participants as a solution to all of their credit problems but rarely is and so the participants drop out.” – Source
So let’s run through these issues one-by-one.
Any consumer can discontinue any credit counseling program at any time. There is no time specified contract to enter into. And while it is true that credit cards included in a credit counseling program can impact your credit score when they are closed, it appears the Debt Consolidation USA primary solution is a debt settlement program which can have an even more pronounced impact. – Source
Who would “they” be if the consumer is the one to start negotiating with their own creditors? All third-party intervention options are going to be noted with the creditors.
Consumers who enroll in a credit counseling program will no very quickly what the creditor terms are. With fees around $50 a month and no long term commitment it hardly seems like a reason to avoid credit counseling. A more important reason would be that credit counselors don’t actually negotiate with creditors, but they missed that entirely.
The main tool is a budget?
Debt Consolidation USA suggests consumer should use debt settlement instead of credit counseling but the success rate with debt settlement is very low as well. So their warning about credit counseling would apply to the debt settlement service they sell as well.
Their warning is consumers do not “take into account other possible pathways” but at the same time Debt Consolidation USA tells people “We’ll help you find the best course for your financial needs, build a customized debt relief plan, and avoid filing for bankruptcy.” Why avoid bankruptcy when it is a valid solution? – Source
So if Debt Consolidation USA is so against credit counseling then why do they claim to be a leading referral source for credit counseling?
Eagle One Debt Solutions
And that’s where I thought this story would end but a quick look at the Debt Consolidation USA testimonial page left me scratching my head.
Why in the world would a company that claims to offer broad and comprehensive help and “We’ll help you find the best course for your financial needs, build a customized debt relief plan, and avoid filing for bankruptcy. Whatever your financial needs may be,” only have client testimonials that almost all name Eagle One Debt Solutions?
So what is the point of Debt Consolidation USA and what is your impression of their site? Post your comments below.