(Franklin Debt Relief offers a debt settlement program to consumers and is neither non-profit or a credit counseling agency.  The information presented below is for educational purposes, so that consumers can make a more educated decision on whether debt settlement, the service offered by FDR, or credit counseling, the option described below, is a better debt relief solution for their situation).  

Many debt relief companies tout their non-profit, tax exempt status as one of the primary reasons why one should use their services. In some cases, dealing with a non-profit can be advantageous to a consumer. For one, many non-profit debt relief agencies will waive their fees if you show a legitimate inability to pay.  Secondly, legitimate non-profit agencies are far more objective than their profit-driven counterparts and less likely to push you into a program you not need.  Third, a non-profit agency usually has the support of your creditors, which can prove advantageous is getting interest rate and other concessions from your credit card companies.  Fourth, non-profits deal with smaller debt loads, so consumers that are finding that they are not eligible for debt settlement or for-profit credit counseling programs because they do not owe enough can always find relief by enrolling in a non-profit debt service. Needless to say, these are nice perks offered by some non-profits.

The problem with non-profit credit counseling companies lies not in the fact that they are non-profit. Rather, the problem lies in the service they offer---a service that studies show has up to a 70 percent failure rate.   Read this article for more info about debt relief services and their failure rates.

1. Non-profit status does not ensure affordability – Having your fees waived by virtue of the non-profit status of the credit counseling organization is nice, but that does not necessarily mean that you will be able to afford the monthly payment.  Many consumers find that credit counseling does not provide adequate debt relief. Moreover, as little as one missed payment can lead to being dropped from the special interest rates offered by the credit card companies – When this fact is considered in light of the high monthly payment, it only makes working with a non-profit credit counselor more problematic.

2. Non-profit status does not ensure legitimacy – Despite popular conception advanced partly by the non-profit agencies’ advertising initiatives, working with a tax exempt organization does not necessarily ensure that the company is reputable. In fact, recent IRS audits have lead to over 30 credit counseling agencies from losing their non-profit status. Other supposedly non-profit debt relief companies like Ameridebt have been completely shut down by the FTC for deceptive practices.

3. Non-profit status does not ensure they have your best interests in mind – Bear in mind that the majority of the funding that non-profit credit counselors receive comes from the credit card companies themselves, and therefore, they have an incentive to convince you to pay more than you can reasonably afford. Ultimately, it is naïve and foolish to devoutly consider the advice of a credit counselor because they offer non-profit debt relief.