Many of these companies charge up to 20% of the debt as a fee. That means that a consumer with $20,000 in credit card debt (not at all uncommon), would be charged up to 4000.00 - are you kidding me!



No wonder these companies spend so much on advertising. They can afford it. However, the tide is changing.

The IRS has begun revoking the tax free/non-profit status of many of these companies because they didn't do what they said they were going to do, PROVIDE COUNSELING. Most companies that have debts owed to them will accept a reduced amount in order to get paid.

If you are behind in your debts and were to call your creditors now, explain your situation to them, and ask for a reduction in the balance vs. bankruptcy - most will accept immediately. So why should you pay an exorbitant fee just to get someone to make a phone call for you?

Proper negotiation requires knowledge of the law, what your rights are, forms and some instruction. It would be even better if these companies offered some assistance in the form of advice. But most don't! No advice, no counseling, no education.

A few years ago the IRS begin investigating several of the largest credit counseling services, many with a non-profit status. The IRS commissioner, Mark Everson, stated that those agencies “poisoned an entire sector of the charitable community”.

The commissioner wet on to say that in many cases, all these agencies did was direct business to for-profit companies. Several of these agencies spent millions of dollars on ads to convince anyone with debt to solve their financial problems with a phone call to them.

Unfortunately, the IRS investigations may also affect the clients of these companies. New bankruptcy laws require that consumers get professional debt counseling before they file. Since many of these companies are not considered to be professional debt education companies, they did not qualify under the new statutes. What a mess!

Since most CCC and Debt Consolidation companies say that they are non-profit, and the consumers that use them are under duress, the consumer usually goes in with their defenses down a little. Homeless shelters, and churches are non-profit, so it has to be a good thing, right?

Most of these companies are for profit. The exist to make money off of people who are desperate to solve their debt problems, desperate to save their homes, their cars, their credit, their financial future, their families. The prey on fear, and do little to solve the problem.

Some companies out there do have your best interest at heart. Don't work with the first one you see just because they claim to be non-profit.

The best way that you can solve the problem, is to learn how to negotiate with creditors. Educate yourself. You have rights, find out what they are! Find a company that will provide that education, and will answer questions and offer guidance when you need it.

That is the solution to permanent debt reduction, debt control, and debt elimination.