Credit Counseling services do not do anything that the individuals could not do for themselves. And that includes calling the credit source and asking for an abatement of interest, reduction in payment, or a lesser amount at payoff.
You must remember that most legitimate credit counseling services are supported in one way or another by the financial services industry. They need a front organization, preferably a non-profit, to take the creditor by the hand and lead them gently back to making payments. This is done under the guise that you will receive a better credit score and live happily ever after. It doesn’t work that way and it is an entire broadcloth of fiction to think otherwise. If you doubt that statement, go apply for a bank loan or a mortgage loan thru a legitimate lender. They will tell you your credit sources report poor performance. You can explain until you are blue in the face, but it won’t do anything to change their attitude.
The illegitimate credit counseling services that have sprung up over the past 10 years work on a percentage of the debt and kickbacks from the credit source if they can get the account working again. In essence you have to turn over your paycheck to them and they interface with the creditors, leaving you enough to exist. In far too many cases the organization you gave your check to did not pay the creditor and in a few months you are headed toward bankruptcy at an exceptional speed.
If you haven’t read this lately, let me refresh your memory – some 30 percent of the auto purchasing public does not have credit worthy standing. This brought the sub-standard car financing people into the spotlight and they are reaping billions with their high rates of interest, bogus charges and repossessions when all else has failed.
If thirty percent of the car market legitimately should not be buying a new car, can you imagine how many billions of dollars are involved in bank credit cards, store credit cards, gas credit cards and the rest? It probably runs in the hundred of billions of dollars in this country alone.
It doesn’t take much insight to figure out that someone would come up with a way to make some serious dollars servicing the needs of the interface between the finance industry and poor creditors. Hence we have a credit counseling service industry whose reputation has slipped badly over recent times. You can read several examples in the articles under this debate title of less than perfect performance.
The Bush Administration changed bankruptcy laws so that the financial institutions get more leverage against bankrupt individuals to see if they can’t squeeze a few more bucks out of an individual.
The banking industry and other credit card issuers fight for market share by offering an ever widening array of credit services. They offer these services to folks whose credit scores are lower and lower. The credit counseling services organizations couldn’t be happier. The basis of their services is that individual creditors need help and are willing to pay for someone to handle their problems. As long as the credit problems go away, most people don’t pay too much attention after the initial contact period.