DO YOU KNOW HOW THE NON-PROFIT DEBT CONSOLIDATION COMPANIES GET PAID?
I guarantee you, it doesn’t all come from the $35 monthly fee that each person pays. The non-profit debt consolidation companies get paid 8% of the money they collect for a major bank or credit card company.
That’s right, a majority of the income for the non-profit debt counseling, debt consolidation companies comes from the banks and credit card companies!
For many years, the non-profit companies were paid 15% of what they collected and sent to the banks and credit card companies. At that point, these non-profit companies were doing fine. In fact, in the late 1950s, banks came up with the idea of having non-profit companies that would help people pay their debts back.
Let’s look at this idea – if a “for-profit company” gives money to a “non-profit company”, the for-profit company gets a tax break. That’s how it works! So, if the banks can “donate” a portion of what they collect to a “non-profit debt collection company”, not only do they get income from the money collected, BUT they get a tax break for donating back to the non-profit company. It really is a brilliant idea – for the banks and credit card companies.
But, then there was a problem. About 5 years ago, the banks and credit card companies decided to cut the 15% to 8% for reasons best known to them. That means that the non-profit companies took a 45% pay cut!
Can you imagine getting a 45% pay cut? Maybe you have already experienced that and worse! So, you know what it’s like to have such a cut in your income. That’s what happened to the non-profit companies and they panicked! How are they going to keep up their staff and their overhead if they just lost 45% of their income?
Well, they did some things that lead to a US Senate investigation on the Consumer Credit Counseling programs (the non-profit companies) in 2004.
And the Senate found some very eye opening facts!