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When drowning in debt, look for the right life preserver
Attorney General Rob McKenna has praised the Federal Trade Commission for tackling a Tacoma company that preyed on financially strapped consumers. He urged consumers to take advantage of low-cost credit counseling services.
“When you’re drowning in debt, you’re desperate,” McKenna said. “But if you’re not careful, your chosen rescuer may toss you an anvil instead of a life preserver.”
“There’s no one-size-fits-all solution to solve your financial problems,” McKenna continued. “If you need help, find a legitimate credit counselor who will develop a personalized money-management plan.”
Mutual Consolidated Savings in Tacoma was sued by the FTC for allegedly using robo-calls to aggressively target consumers then charging fees of $690 to $899 while providing little help. The FTC froze the assets of the company’s owners.
“Mutual Consolidated Savings has been the source of numerous consumer complaints,” McKenna said. “The Federal Trade Commission’s move to shut down its Tacoma call center means that fewer consumers will be misled by the company’s promises to bail them out of debt.”
Spotting a debt repair scam
• The company promises to repair a bad credit report.
• The organization wants you to pay before any services are provided.
• You aren’t informed you of the legal rights and actions you can take yourself – for free.
• The repairer suggests you shouldn’t contact a credit bureau directly.
• The company suggests that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security Number.
• The company quickly recommends bankruptcy.
Finding Legitimate Help
The U.S. Department of Justice’s U.S. Trustee Program provides a list of government-approved credit counseling agencies online at http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm.
The National Foundation for Consumer Counseling provides a list of member agencies at www.nfcc.org or call 1-800-388-2227 for 24-hour automated office listings.
Be aware that just because an organization says it is “nonprofit” doesn’t guarantee that its services are free or affordable.
Think carefully before sending money to a credit counseling organization that doesn’t have an office in your community.
Shop around. Compare a couple of services and get a feel for how they operate. The credit counselor should spend at least 20 to 30 minutes with you in order to get a complete picture of your finances.
Ask a lot of questions and get the answers in writing.