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The Maryland Office of the Commissioner of Financial Regulations cautions consumers against working with companies that make promises that they cannot deliver, including erasing bad credit, creating a new credit identity and removing bankruptcies, judgments, liens and bad loans from your credit history. “Every day credit service businesses target consumers with troubled credit," according to the office. "These companies promise to clean up consumer credit reports, help consumers obtain credit, insurance and employment. CSBs require consumers to pay significant fees, often in advance, for promised services. The fact is, however, no one can remove accurate information from your credit report, even if it is negative.”
All credit services organizations in Maryland must have a license with the Office of the Commissioner of Financial Regulation. The Maryland Credit Services Business Act provides specific guidelines for the operation of credit service businesses in Maryland, including debt settlement companies. All companies must provide you with a written contract of the services, not require payment up front and provide written disclosures before you sign a contract. You also have the right to cancel a contract before midnight on the third business day without penalty.
“If you choose to do business with a credit service business, make sure that the company is licensed and in compliance with the law," the Office of the Commissioner of Financial Regulation says. "Additionally, avoid any CSB that advises you not to contact a credit reporting company directly, any CSB that advises you to dispute all of the information in your credit report (regardless of its accuracy or timeliness); and/or Does not inform you of your legal rights and what you can do for yourself free of charge.”
Questions You Should Ask
While there are many agencies that offer debt settlement services in Maryland, it is important to find the right fit for you. The NFCC recommends asking a lot of questions before signing a contract, including if the agency recommends that you stop paying your creditors, if it will reported as “Paid by Settlement” on your credit report and what taxes on the forgiven debt you will be responsible for.
“The advantage of using a credit counseling service instead of contacting creditors yourself is that they already have a relationship with thousands of creditors, and they will work out the details for you,” according to the Maryland Attorney General’s Office. “In addition, you often have to make only one payment each month to the counseling service instead of writing many checks as you would if you did it yourself." Maryland residents have been the victim of numerous credit counseling scams in recent years, and it is important to carefully select a reputable agency.
Credit Counseling agencies must follow the regulations set forth in the Maryland Credit Services Businesses Act. All credit services organizations in Maryland must have a license with the Office of the Commissioner of Financial Regulation.
Credit Counseling In Four Steps
Step One: Contact A Credit Counseling Agency
We make finding a credit counselor easy. Simply complete the form at the top of this page. Your information is secure and there is never any obligation. Another option? Contact your local University of Maryland Extension office for credit counseling.
Step Two: Ask About Fees
Always ask about fees for any credit counseling services before signing any contract. Under the Credit Services Business Act, credit counselors cannot ask for any fees upfront. Additionally, the agency must provide you a contract that details all of the fees and services. The agency can also not charge you more than $5 for your credit report.
Step Three: Meet With Your Credit Counselor
When you meet with our credit counselor, be sure to provide information about your financial situation. Your counselor may provide advice or recommend a financial management course. Another option is a debt management plan, which involves the agency negotiating with your lenders. You would then make a monthly payment to the agency, which would pay your creditors directly.
Step Four: Follow Their Advice
Follow the advice of your credit counselor and work to make lasting changes in your financial situation. Keep documentation of all credit counseling services and paperwork in case you need the information in the future.