Is Debt Relief Possible When Credit Counselors Are Funded By Your Creditors?

Given the nature of credit counseling and the fact that the majority of their income is derived from percentage-based contributions from the creditors, it should come as no surprise that many consumer advocates question whose interests they are really serving—the consumers or the credit card companies. Other financial experts flat out consider credit counseling agencies as nothing more than a collection agency in disguise. Although important to keep in mind as one scours through the maze of debt relief options, consumers should also not let this inhibit them from enrolling in a credit counseling program if it will truly be a benefit financially. In other words, if you are working with a credible organization that is offering you dramatically lower interest and payments, what difference would it make if they are making money off providing their service? Sure, the credit counseling organization benefits, but so does the consumer.

The main reason why the issue of “whose interest credit counselors serve” is important, however, rests with the fact that many consumers assume that since some credit counseling organizations are non-profit, they will offer trustworthy or intelligent advice. Simply put, this is a very dangerous assumption. Consumers should remember that they are best at determining the appropriate approach for debt relief because 1) they know own their goals and needs better than anyone and 2) they will always have their self-interest in mind.

For consumers in desperate need of debt relief should not be swayed to pay more than they can reasonably afford because the advice comes from a non-profit credit counseling agency. Ultimately, it is the consumer’s responsibility to carefully weigh and research their debt relief options, not an agency that is funded primarily by the credit card companies.

Follow this link to learn about the second major disadvantage of credit counseling.