I heard from my adult daughter yesterday and she was very upset. Two months ago she signed up with AmeriDebt to try to consolidate her bills and make them easier to pay. She was told on the phone by AmeriDebt that a voluntary donation of the total owed would go to the agency. If this donation could not be made they would waive it due to hardship.
She was also told that she should put all of her bills on the program including her student loans. They were told that the creditors would call but just ignore them or tell them it was all being taken care of.
She made her first payment of $750 then her second. Unknown to her, the total first payment went to AmeriDebt for their "voluntary donation" and none of that money reached the creditors.
If she had left her student loans off the contract she would have only been charged $350 because that is more than half of her debt. By including them, even though AmeriDebt have no authority to deal with the student loan people, it costs her an extra $400 a month and a $400 "voluntary donation."
When she called AmeriDebt about this, they said she signed the contract and that she agreed to it. They said that the "voluntary donation" was in the contract and they had a legal right to take the money out up front. She could not talk to her original "counselor", it took her hours on hold to talk to anyone about it. They disavowed that the donation could be waived.
She called one of her credit card companies and they said that they had their own "hardship" program where they would lower the interest and make it easier to pay off.
Please, check out other options before you use a credit counseling agency. Although they can make arrangements with your creditors, many of your creditors would also make the same generous arrangements with you.
This is just a warning about my daughter's experience. I feel that these agencies are an elaborate scam preying on those in trouble.
If you have feedback on these agencies, feel free to add it below or send it to clipper@thriftyfun.com.
About The Author: A good link for information on repairing your credit is:
Credit Info Center.
From the looks of the message boards the credit counseling agencies all work the same way. There are many other "horror" stories with these lovely "non-profit" agencies listed there.
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