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Deeper in Debt

Hank Investigates: Deeper in Debt

She's a mom trying to juggle it all, a new baby, a job and $12,000 in credit card bills. So like more and more people, Tara Mantha of Holden discovered the tempting offers of credit counseling centers. Get out of debt, they say, consolidate your bills. Just pay us each month and we'll make sure your creditors get their money. Tara signed up.

Tara Mantha
"I didn't think I was going to have to worry about it anymore."

Bank and company statements prove each month she paid the agency on time, but look at her credit card bills, the credit counseling company never paid them!

Now, Tara's inundated with past due bills, late fees and collection notices.

Tara Mantha
"My husband had to get a second job, I had to take my son out of day care."

Her credit report is ruined and so are her hopes for a new home.

Hank
"All because…"

Tara Mantha
"I had to catch up on my bills."

Hank
"What did they do with your money?"

Tara Mantha
"Absolutely nothing. Kept it."

Our investigation reveals Tara is a victim of a system out of control in Massachusetts. Some agencies people trust with their financial futures are putting people deeper in debt. Many are breaking the law, and getting away with it. What's more: state officials know it.

This former B.U. student sent hundreds of dollars to one agency -- they only paid some of her creditors!

Hank
"Where did that leave you?"

Farrah
"Pretty upset, pretty angry, broke!"

This man was baffled when his bills showed late fees and no payments received. He thought his counseling company was paying them -- they weren't.

Chris
"It hurt us in a big way."

How can it happen? To be a credit counselor in Massachusetts, there is no law that says you need any special training or education. Unlike 50 other trades and professions in this state, (from the person who designs your garden to the person who does your nails), there's absolutely no special regulation or licensing for those entrusted with your money.

Mel Stiller, National Foundation for Credit Counseling
"Massachusetts has some of the weakest rules in the country regarding credit counseling agencies."

In fact Mass. law only requires credit counselors be an attorney or registered with the attorney generals office as a non-profit corporation. We first looked at this industry almost two years ago.

Hank (2000)
"Before they go into business does anyone know who these people are?"

Alice Moore (2000)
"No."

Back then we checked the A.G.'s records to see how many of the companies in the 2000 phone book were properly registered, turned out 19 of 25 were unregistered! The A.G.'s office then told us, "it’s our intent to make sure these companies are following the law."

But things have actually gotten worse! We checked the 2002 phone book, of 25 companies listed, now 21 are not registered! What’s more, we found the A.G.'s office has received dozens of complaints about them.

Mel Stiller
"For some reason the regulatory agencies have not gone after them and you'd have to ask them why not."

We wanted to ask the A.G.'s office why they had taken no action, but this year they refused an on camera interview.

As a result here in Massachusetts it’s financial roulette with more and more losers.

Tara Mantha
"I thought that everything was going to be fine. They assured me in three years I’d be debt free.

Hank
"And now?"

Tara Mantha
"That is not the case."

After our last story, a bill was filed on Beacon Hill to regulate these companies -- it's now sitting in a committee. So if you're considering using one of these agencies, call the A.G.'s Public Charities division to make sure they are properly registered and then check consumer agencies for complaints.

For more information:

To check on a credit counseling company:

Call the Atty. General's Public Charities Division to see if the company is registered as a non-profit, it should also have an in-state office.

Call consumer agencies to check for complaints or to file one:

Many legitimate consumer counseling companies belong to these professional organizations. Call for more information.

National Foundation for Credit Counseling: 301-589-5600

website: www.nfcc.org

Assoc. of Independent Consumer Credit Counseling Agencies:

 

A bill to regulate credit counseling agencies has been in the Senate Ways and Means Committee since June of 2001.

To contact The Senate Ways and Means Committee:

Text of Bill:

www.state.ma.us/legis/bills/st00368.htm

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Segment Information

Reported by:

Hank Phillippi Ryan

Producer:

Mary Schwager

Contact:

helpmehank@whdh.com

Archived Reports:

All Hank Investigates