There's a single topic which each time I write about it looks to produce some hate mail whilst as well spawning a flurry of great praise from consumers. Of course, the hate mail is often from a few persons that happen to unique these "certain types" of organizations I discussed and those organizations of course are Credit Counseling or Debt Consolidation companies; of which many "claim" to be non-profit organizations.
You'd practically must be an ostrich with your head stuck from the sand to not see or hear at least 1 advertisement a day from a Credit Counseling or Debt Consolidation Company. However, you'll be able to expect this to alter and alter soon. Simply because this can be a topic which tends to "stir up" the owners of these businesses, I am going to eat another approach by NOT sharing my opinion, but rather, the opinion of others. I'll begin with the news media and the Internal Revenue Service:
"(NPR News, May perhaps 15, 2006). The Internal Income Support is revoking the tax exempt status of some of the largest credit score counseling agencies inside country. An IRS investigation disclosed how the corporations solicited business from persons seriously in debt and that they didn't offer counseling or consumer education, as required.
Prodded in component by a congressional oversight committee and consumer advocates, the IRS started investigating dozens of credit counseling agencies -- most holding non-profit popularity -- two years ago. IRS Commissioner Mark Everson says the businesses "poisoned an entire sector with the charitable community."
Everson says in numerous instances, firms had been organized merely to funnel corporation to loosely affiliated for-profit companies. Numerous of the companies spend millions of income on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations aren't bound by the federal do-not call list, the companies were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service.
The IRS investigations are also probably to affect consumers, thanks to a brand new bankruptcy law that requires customers considering bankruptcy to obtain counseling previous to they are allowed to file. The IRS wants to make certain that only legitimate non-profit agencies are making the counseling. As well as the actions announced Monday, the IRS is sending over 700 compliance letters for the rest from the credit ratings counseling market (END)."
Since almost all Credit history Counseling and Debt Consolidation businesses claim a non-profit status, I think most shoppers are very easily sucked in with their skepticism and defenses at bay. After all, after most of us hear the term "non-profit" the very first thing we usually think of is a church or homeless shelter.
From the NPR article and the actions on the IRS, I believe it is fair to assume that quite a few of these "non-profit" companies were operating under a scenario similar to that of the wolf guarding a hen house. However, this does not mean all credit score counseling and debt consolidation organizations are damaging but... you do must know the fact about how they operate and their limitations.
The very first factor you would like to realize is these firms are ALL far more interested in making cash off you than they're in preserving your credit rating. The bottom line with either credit counseling or debt consolidation is that it undoubtedly ruins your credit. I can just hear the corporations arguing this with a buyer appropriate now, telling them nonsense like "It helps your credit rating because it tells creditors that you might be working on your situation and not only running away from it." Listen... if a single these places tells you that than watch out. Why? Mainly because they will lie to you about other elements as well!
One on the very first actions these programs normally requires you to do is for you personally to CLOSE all your revolving credit ratings accounts. You then make payments on the company and they eat care of everything for you. What this says to all your creditors (as well as anybody considering giving you credit) is that you are so out of control as part of your finances that you just cannot even manage paying everybody back on your own. Therefore, you're hiring someone else to complete it for you!
99% of the time these firms will claim they are able to negotiate within your creditors and get interest rates reduced thereby saving you money. Though that is true, what's also genuine is you may quickly negotiate these same rates in addition to they are able to by just calling your creditors yourself. You would be amazed at how numerous of the creditors would adore to hear from you (especially as soon as the chips are down!). Not as well mention, any cash the counseling company was to save you'd more than likely be sucked back up by their monthly fees (usually around $500 to $1,000 per year).
This brings us into a whole other dynamic of their corporation model. Since these companies always make their dollars off of monthly fees paid by the consumer, the longer they are able to keep those monthly fees coming within the far more profitable their corporation will be. It's for this reason that most consumers who sign up with these firms normally discover themselves on payment plans in the lowest monthly payment possible (which turns out to also be the LONGEST payment plan as well). Not surprising is it?
Am I against Credit Counseling and Debt Consolidation companies? Certainly not. Following all, you'll find millions of individuals who will in no way be able to manage their finances. Credit score to them is often a destructive addiction much like alcohol or drugs and they will never be able to manage it. Instead, it is going to usually control them. We've all observed these people. Each time they are lengthy credit rating shortly thereafter they're in financial difficulty (usually blaming it on some external factor). For these people I believe these credit ratings and debt counseling programs is usually a good issue (as a ruined credit ratings report is not a hindrance to them but really an asset). It keeps them out of future financial issue by forcing them to live their lives over a "cash and carry" basis; that's ultimately conducive to a far better regular of living down the road.
You'd practically must be an ostrich with your head stuck from the sand to not see or hear at least 1 advertisement a day from a Credit Counseling or Debt Consolidation Company. However, you'll be able to expect this to alter and alter soon. Simply because this can be a topic which tends to "stir up" the owners of these businesses, I am going to eat another approach by NOT sharing my opinion, but rather, the opinion of others. I'll begin with the news media and the Internal Revenue Service:
"(NPR News, May perhaps 15, 2006). The Internal Income Support is revoking the tax exempt status of some of the largest credit score counseling agencies inside country. An IRS investigation disclosed how the corporations solicited business from persons seriously in debt and that they didn't offer counseling or consumer education, as required.
Prodded in component by a congressional oversight committee and consumer advocates, the IRS started investigating dozens of credit counseling agencies -- most holding non-profit popularity -- two years ago. IRS Commissioner Mark Everson says the businesses "poisoned an entire sector with the charitable community."
Everson says in numerous instances, firms had been organized merely to funnel corporation to loosely affiliated for-profit companies. Numerous of the companies spend millions of income on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations aren't bound by the federal do-not call list, the companies were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service.
The IRS investigations are also probably to affect consumers, thanks to a brand new bankruptcy law that requires customers considering bankruptcy to obtain counseling previous to they are allowed to file. The IRS wants to make certain that only legitimate non-profit agencies are making the counseling. As well as the actions announced Monday, the IRS is sending over 700 compliance letters for the rest from the credit ratings counseling market (END)."
Since almost all Credit history Counseling and Debt Consolidation businesses claim a non-profit status, I think most shoppers are very easily sucked in with their skepticism and defenses at bay. After all, after most of us hear the term "non-profit" the very first thing we usually think of is a church or homeless shelter.
From the NPR article and the actions on the IRS, I believe it is fair to assume that quite a few of these "non-profit" companies were operating under a scenario similar to that of the wolf guarding a hen house. However, this does not mean all credit score counseling and debt consolidation organizations are damaging but... you do must know the fact about how they operate and their limitations.
The very first factor you would like to realize is these firms are ALL far more interested in making cash off you than they're in preserving your credit rating. The bottom line with either credit counseling or debt consolidation is that it undoubtedly ruins your credit. I can just hear the corporations arguing this with a buyer appropriate now, telling them nonsense like "It helps your credit rating because it tells creditors that you might be working on your situation and not only running away from it." Listen... if a single these places tells you that than watch out. Why? Mainly because they will lie to you about other elements as well!
One on the very first actions these programs normally requires you to do is for you personally to CLOSE all your revolving credit ratings accounts. You then make payments on the company and they eat care of everything for you. What this says to all your creditors (as well as anybody considering giving you credit) is that you are so out of control as part of your finances that you just cannot even manage paying everybody back on your own. Therefore, you're hiring someone else to complete it for you!
99% of the time these firms will claim they are able to negotiate within your creditors and get interest rates reduced thereby saving you money. Though that is true, what's also genuine is you may quickly negotiate these same rates in addition to they are able to by just calling your creditors yourself. You would be amazed at how numerous of the creditors would adore to hear from you (especially as soon as the chips are down!). Not as well mention, any cash the counseling company was to save you'd more than likely be sucked back up by their monthly fees (usually around $500 to $1,000 per year).
This brings us into a whole other dynamic of their corporation model. Since these companies always make their dollars off of monthly fees paid by the consumer, the longer they are able to keep those monthly fees coming within the far more profitable their corporation will be. It's for this reason that most consumers who sign up with these firms normally discover themselves on payment plans in the lowest monthly payment possible (which turns out to also be the LONGEST payment plan as well). Not surprising is it?
Am I against Credit Counseling and Debt Consolidation companies? Certainly not. Following all, you'll find millions of individuals who will in no way be able to manage their finances. Credit score to them is often a destructive addiction much like alcohol or drugs and they will never be able to manage it. Instead, it is going to usually control them. We've all observed these people. Each time they are lengthy credit rating shortly thereafter they're in financial difficulty (usually blaming it on some external factor). For these people I believe these credit ratings and debt counseling programs is usually a good issue (as a ruined credit ratings report is not a hindrance to them but really an asset). It keeps them out of future financial issue by forcing them to live their lives over a "cash and carry" basis; that's ultimately conducive to a far better regular of living down the road.
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Facts Buyers Should Know Previous to Considering Debt Consolidation or Credit score Counseling - credit counseling and national credit consolidation
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