The Senate Investigation Into The Non-Profit Consumer Counseling Programs (Part 1)

The Investigation of  Debt Consolidation

The Investigation of Debt Consolidation

With a 45% pay cut from the banks and credit card companies, the non-profit debt consolidation companies (consumer credit counseling companies) panicked and decided to come up

with ways to make up for the damaging pay cuts: 

  1. The first month’s payment to the debt consolidation never went to the client’s creditors.  Instead, the debt consolidation company kept that first payment to help cover their overhead. 

Here’s an example, a person joins the non-profit debt consolidation company.  They are charged $35 a month as a fee to the debt consolidation company along with $600 that is to be distributed to the client’s creditors. 

However, in their first month, the $600 never goes to their creditors.  It is kept by the non-profit company to help handle their overhead! 

You don’t know because everyone is smiling, but for the next month, your creditors are calling you wondering why you haven’t paid them.  You explain that there is this non-profit company that you are working with and that they will pay you. 

Then, you call the debt consolidation company and tell them what is going on.  They explain that they are setting up your account and to have your creditors call you. 

Finally, your second month comes around and you pay your $35 fee and $600 that goes to your creditors.  This time, the $600 is distributed to your creditors and the heat from your creditors “goes away”. 

However, you are now a month behind and the monthly late fee applies – $35! 

That means that every month you will be late with the payment to your creditors that the non-profit debt consolidation company makes for you. 

What happens to your balances with your credit cards? 

They go up by the $35 late fee! 

So, that wasn’t a good idea for you, though some debt consolidation companies were able to meet their overhead. 

Wait until you see what else the non-profit companies did to try and handle their pay cut from the banks and credit card companies!


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