Free Advice for Mounting Credit Card Debt

Seven On Your Side
October 7, 2008 1:52:56 PM PDT
For-profit credit doctors are making promises to consolidate your credit and lower your interest rate. The only problem is you can get these services for free. Soraya Vazquez has been in a wheelchair all her life, crippled by cerebral palsy. Last month she was called by a company offering to help her with her $5000 credit card debt. "(They offered) a decrease in my interest rate," tells Soraya Vazquez to 7 On Your Side's Tappy Phillips.

But Soraya quickly realized that she didn't need their services. Her interest rate was already below 9 percent. So she called to cancel her agreement. "And they said, 'no we don't cancel,'" said Soraya.

Now there is a charge of $790 that the debt solution company debited her, although Soraya says they did nothing for her. "I think they're terrible."

Pedro Salazar heads up the non-profit Financial Empowerment Center. They help consumers dig out of debt for free. He cautions against paying a for-profit credit doctor.

"Somebody telling you for a certain amount of money they'll clean up what's on your credit report is the equivalent of telling you they can clean up your criminal record. It's not going to happen," says Pedro Salazar of the Financial Empowerment Center.

Pedro says if you find yourself in financial trouble, don't dig yourself in deeper by paying unnecessary money to a debt counseling service. Instead, try a non profit agency. "Essentially, the same way collection agents hassle clients, we hassle the agencies."

As for Soraya's hassle? She says her bank is disputing the debt doctor's original charge.

Soraya says, "(I just want them to) refund my money."

When getting debt assistance, always be wary of people who call you out of the blue. Also, do not allow yourself to be pressured into making a quick decision. Think it over, get advice, and make the best decision for your situation. If you need credit counseling or debt consolidation, call around yourself and ask about services and fees. There are free counselors out there to assist you.

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Story by: Tappy Phillips
Produced by: Steve Livingstone