The Federal Trade Commission, the Internal Revenue Service and the state regulators have issued notices alerting the consumers were seeking help from credit counseling organizations. Most of the consumers look for a legitimate and non-profit organizations to get assistance in managing their credit and the debt. They look for the non-profit organizations with the hope of getting genuine assistance. However it has come to notice that while many credit counseling services do their jobs while providing valuable assistance, education and advice to those seeking to manage the credit, several maintained non-profit status in order to circumvent certain Federal and State consumer protection laws. While charging higher fees in the manner of hidden charges and voluntary donations they try to maintain a tax-exempt status by seeking the non-profit registration.

“ Many of these groups provide a valuable service to consumers, but some use the tax code to skirt consumer protection laws” said IRS commissioner Mark W. Everson. “The IRS will work to protect the integrity of the tax law to ensure that tax-exempt organizations understand and comply with the rules. We will work with other federal agencies and State regulators to combat abuse in this area. It is not fair to taxpayers struggling with financial problems to be taken advantage of by credit counseling groups exploiting gaps in the law.” (January, 2006)

Consumers also need to be weary of counseling agencies offering drastically favorable results in a very short period of time. There are no quick fixes to a bad credit situation.

The following checklist will help you determine whether the credit counseling agency you have in mind does its required share of duties or not.

Does the organization of credit counseling education and advice to manage finances better?

A credit counseling organization should provide a written copy of the agreements to the consumer which should list in detail the services to be performed as well as any kind of payment and admiration that is expected from the consumer. Any promises and, guarantees and Timeline promised by the credit counseling organization should also be mentioned along with the legitimate business name and address.

Watch out for fees and charges that are cloaked and charged sometimes as “voluntary donation” and other high monthly charges. Charging high fees for performing actions that are not legitimately possible such as removing bankruptcy and negative data from your credit report before the due time is also a dubious practice and is likely to cause you to lose money. Any credit counseling agency promising to get you out of debt easily and quickly is a red flag.

In case of signing up for a debt management plan to make sure that your credit agency is ready to work with all your creditors and not just the ones with which they have a fair share of agreement. Make sure that the agency provides you with a monthly or quarterly statement to make sure that the money you pay every month is getting dispersed to all your creditors.

The first and the basic of all steps is to check the credit counseling business with the local chambers of commerce and the local Better Business Bureau.

“State charity officials are working with other state and federal agencies to remedy abuses in this area, and to assure that non-profit credit counseling organizations operate in accordance with the charitable trust or non-profit corporation laws under which they are formed” said Mark Pacella, president of the National Association of State Charity Officials. ( January, 2006)

The following web sites are recommended by the IRS, FTC and NASCO for consumers who are considering using a credit counseling organizations for further information.

www.FTC.gov — the Federal Trade Commission websites that allows you to become familiar with issues regarding credit and the latest alerts.

www.IRS.gov/charities — a list of organizations that are non-profit and tax-exempt along with information as to what the duties of such an organization are if they are to maintain the non-profit status.

www.nasconet.org — a list of State charity official offices.

www.TREas.gov/financialeducation — this websites gives you more information on federal financial education programmes and resources.

Consumers who believe that they have been a victim of credit counseling and credit improvement fraud should immediately file a complaint with the Federal Trade Commission by calling toll-free on 1 — 877 — FTC — help, or file a complaint online through the FTC website www.FTC.gov.