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Freedom
Financial Network Provides 8 Ways to Spot a Credit-Counseling
Scam
-- Tips aid consumers in
wake of IRS credit-counseling crackdown --
San Mateo, Calif.,
May 23, 2006 – With recent news that the Internal
Revenue Service is revoking the tax-exempt status of
every one of the 41 credit-counseling agencies it has
audited over the past three years, consumers are more
worried than ever about obtaining reliable help recovering
from debt, said Bradford G. Stroh, co-founder and CEO
of Freedom Financial Network, LLC.
To support people
seeking a trustworthy organization to help them win
the battle against debt, Stroh and his firm have developed
a list of eight questions to ask a credit-counseling,
debt-management or debt-resolution company before agreeing
to work with any organization.
“Good organizations
do exist that really can help consumers, and they will
be more than willing to answer a few questions about
their business,” Stroh explained. “After
all, they are helping people with a very intimate aspect
of their lives: their money. Any organization that won’t
answer or doesn’t provide satisfactory information
does not deserve your business – so keep looking
for a reputable firm.”
Stroh’s suggestions
include asking organizations the following eight questions:
1. Does the company get any form of
consideration or compensation from the creditors themselves?
Many credit counseling firms receive funding in the
form of what are called “fair share” payments
from creditors. The payments are incentives to get consumers
into debt management plans (DMPs), paying back as much
of their debt, plus interest, as possible.
2. Is the company a member of the Better
Business Bureau? A “yes” answer means the
company is willing to have its practices scrutinized
and to respond to consumer complaints.
3. Does the company provide actual
consultations, and provide advice/education to consumers
free of charge? Or is the company simply directing every
consumer into a DMP?
4. Does the company provide educational
material, including budgeting and financial advice,
free of charge? Many firms consider educational material
as an additional fee source, not as a benefit to their
clients.
5. What is the background of the company’s
management team? Look for good, relevant education and
experience -- not a team that jumps from opportunity
to opportunity to make its fortunes.
6. How long has the company been in
business?
7. Is the company licensed and bonded?
Because credit-counseling firms actually handle clients’
money, bond or surety coverage provides recourse if
a client’s funds are mishandled.
8. What are the company’s drop-out
and success rates? Request these statistics. Leading
credit card companies report that many credit-counseling
firms have drop-out rates as high as 90 percent.
Stroh and his firm have developed
a 16-page guide titled “Debt Freedom: Budgeting
& Financial Tools for Today’s Consumer.”
The guide provides advice on understanding cash flow
and debt, defining a budget/spending plan, and setting
goals to attain financial freedom. The guide is available
electronically, at no charge, by e-mailing budget@freedomfinancialnetwork.com.
To further support financial literacy,
Freedom Financial Network has developed a 16-page
guide titled “Debt Freedom: Budgeting &
Financial Tools for Today’s Consumer.”
The guide provides advice on understanding cash flow
and debt, defining a budget/spending plan, and setting
goals to attain financial freedom. The guide is available
electronically, at no charge, by e-mailing budget@freedomfinancialnetwork.com.
Freedom Financial Network, LLC (www.freedomfinancialnetwork.com),
provides consumer debt resolution services through
its Freedom Debt Relief and Freedom Tax Relief divisions.
The company works for the consumer, negotiating with
creditors to lower principal balances due that can
often result in savings of up to half the amount owed,
and offering an alternative to bankruptcy, credit
counseling, and debt consolidation. Freedom Financial
Network has served more than 7,500 clients nationwide
and manages more than $250 million in consumer debt.
Based in San Mateo, Calif., the company also maintains
offices in Sacramento and Tempe, Ariz. The company’s
co-founders and CEOs, Andrew Housser and Brad Stroh,
are semifinalists in Ernst & Young’s 2006
Northern California Entrepreneur of the Year Awards..
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