Debt Management - Debt Management Fees
Debt management fees can vary vastly
from one company to another. Knowing what to look
for and ask when seeking help through debt management
will leave you better off by not making the mistake
of working with an unscrupulous agency that charges
excessive upfront fees or cant disclose or wont disclose
why they have structured their fees as they have.
Many debt reduction agencies operate
as a non profit organization so why are they charging
fees? As a non profit organization there still needs
to be a form of income that helps offset the expenses
of the particular agency. This is usually accomplished
through a nominal monthly fee that an agency charges
to their clients. Several states have put a cap on
the maximum fee that may be charged in an individuals
certain state of residence. This prevents an agency
from abusing their fee structure. Not all debt reduction
companies operate as a non-profit company but they
are still held to the same standards as far as being
licensed to offer debt management services in several
states. Find out what your state requires from the
debt management provider you are looking into. Are
they compliant?
Debt management providers usually charge
what is called a set up fee. This is to help offset
the cost of getting the client enrolled onto their
debt management plan. This process can be time consuming
for the agency therefore it is reasonable to expect
a nominal charge for that service. However be wary
of companies that charge high upfront fees. Typically
anything above $60 should be a red flag. Some agencies
have been known to charge several hundreds of dollars
as a start up fees. What will typically happen in
that scenario is the debt management provider will
actually keep the first payment you make to them as
their fee. Watch out for this as it makes the consumer
more past due with their accounts and is an unnecessary
fee that usually only result in the client being further
in debt.
Make sure to ask if your agency follows
state regulations as far as what they charge for their
monthly fees. Also ask if they send out the first
payment to your creditors. There are several companies
that offer a good debt management service at a reasonable
cost but there are those that take advantage of their
clients. If you are being charge a high monthly amount
I recommend shopping around for another debt management
provider that may be able to do the same if not better
job for you at a lower cost.
Rick Munster is the Media Planner for
Debt Reduction Services, http://www
.debtreductionservices.com. He resides in Boise,
Id. In his spare time he enjoys writing, hiking and
finding a nice lake to drop a line into and do a little
fishing.
