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The Attorney General cautions consumers to carefully choose a debt settlement company after a number of Idaho residents have been victims of scams in recent years. Common unethical debt settlement practices in Idaho include charging large upfront fees, encouraging fake debt management plans and not providing financial education to consumers.
In Idaho, all debt settlement companies are required to be licensed with the Idaho Department of Finance before doing business in the state. Select a Debt Settlement company from the database of agencies currently licensed in Idaho. If you feel that a credit services organization in Idaho has engaged in unfair business practices, you can file a complaint with the Idaho Attorney General office.
Questions You Should Ask
While there are many agencies that offer debt settlement services in Idaho, it is important to find the right one. The National Foundation for Credit Counseling recommends asking a lot of questions before signing a contract. Be sure to ask the company if they will recommend that you stop paying your creditors, if the settlement will be reported as “Paid by Settlement” on your credit report and what taxes on the forgiven debt you will be responsible for.
You should also ask detailed questions about the fees, including if the fees are due in advance, on a monthly basis or after the settlement. Idaho state law does not regulate the amount of fees charged for debt settlement by credit services organizations. According to the credit counseling foundation, if a company’s fees are a percentage of your debt, then most companies charge 13 percent to 20 percent. Other companies base their fee on the amount of debt settled, which is typically around 35 percent. Also, be sure to ask if there are any monthly fees.
Credit counselors in Idaho are required to be licensed before they can offer any advice to you or charge you a fee for any debt counseling, credit repair services or credit counseling. You can check for a credit counselor or credit counseling agency’s license on the state government website.
The U.S. Department of Justice has a list of approved credit counseling agencies in Idaho.
Credit Counseling Tips
The Idaho Attorney General’s office offers several tips for working with a credit counselor:
- Look for a credit counseling agency that offers a range of services including financial education and ongoing support.
- Find an agency that allows face-to-face interaction rather than dealing with someone solely on the phone or online.
- Work with a nonprofit credit counselor instead of a for-profit agency because the fees will be lower.
- Check with the Better Business Bureau to see if there have been any complaints about the credit counseling agency.
- Never allow yourself to be forced to enter into an immediate arrangement with a credit counselor. Being told you must “act immediately” can be a red flag.
- Never agree to pay any fees before your debt has been reduced or settled.
- If you’re offered any type of financial arrangement that requires you to pay a fee or to provide personal information such as your Social Security number or account numbers, ask for the details of the program to be provided to you in writing.
- Read all materials before signing any agreement.
- Discuss the details of the program with a relative or trustworthy friend to see if they think the program is legitimate and will be helpful.
- Ask for references.
When you’re working with a credit counselor in Idaho, you have the option of getting help creating your own budget and plan to get out of debt or you can opt for a debt management plan. Be sure you understand your options and that you are comfortable that you can meet the terms of a debt management plan before you sign anything. Even more important, once you’ve completed the program and are debt-free, begin building a savings account and avoid getting back into debt.