How do debt counselors make their money?
bloomin73 asked:
Although they advertise free debt counseling, they are a company so they have to make profits but how do they do this? I teach high school business classes and would like a better understanding of how it works.
Although they advertise free debt counseling, they are a company so they have to make profits but how do they do this? I teach high school business classes and would like a better understanding of how it works.
Tags: Business Classes, Debt Counseling, Money
December 23rd, 2009 at 4:44 pm
They take some of yours…as fast as possible.
December 24th, 2009 at 5:07 pm
I was a debt counselor.
The money comes from you.
We cut a deal with your creditor. Which you could do yourself.
And then take a percent of your now lowered payment.
Remember this; “not for profit” does NOT mean nobody makes any money.
Look at the Catholic Church, rich rich rich
December 26th, 2009 at 8:32 pm
I think they would consolidate your debts or change your loans to a company that gives them a commission.
December 27th, 2009 at 8:55 am
they perform a management service (which i disagree with think they suck) and after the free counseling service they charge a fee for managing you money!!! i.e. you pay them and they pay your bills!!!
December 29th, 2009 at 8:44 pm
Debt counselors work for either Debt consolidation or Debt settlement companies. I have vast knowledge in Debt settlement so would like to answer accordingly!
Debt settlement companies offers you free Settlement but here is the how they make money.
For example, you have Debt amount of $10,000 and they tell you they can settle it down to $5500 and will divide your payment accordingly, lets say $200 for 27 months. Now, the actual amount they will pay to your creditors will be $4000 but rest 15% goes towards their fee… So they get their $1500 from each Monthly payment you make. Most of the Settlement companies charge this fee in first 3-6 months which is not good for consumers but i know some of those who will even wait 18 months to get paid in full.
So the total money they make is always 15% of debt amount (if legally) & it can be taken in 4 to 18 months from you.
is a good one in this industry!
December 30th, 2009 at 10:48 pm
don’t ask me how the economy works.
December 31st, 2009 at 3:16 pm
I went through a multi-year program with Consumer Credit Counseling Service, billed as a “non-profit” service. They charged me $25 per month all the while I was enrolled. They got some companies to reduce or eliminate additional interest. All except Sears, who wouldn’t budge, but continued to assess huge interest.
All in all, I’m quite glad I did it and I would recommend (and have recommended) this organization.
January 1st, 2010 at 6:43 am
It depends.
“Debt Counselors” are just that…they will go over your financial situation and show you how to budget, and pay your bills. They will give you some educated advice on what to do. There are lots of non-profit companies that offer this for free……but it’s just the start.
You need to look at who these “debt counselors” work for.
Some work for attorneys that specialize in bankruptcies. They will try to talk you into filing BK, and they get a nice fees for doing the court work.
Others work for loan companies, and they will make their money if they convince you to take out a consolidation loan.
Still others are tied into “credit repair/settlement” companies. These guys try to sell their services of working with your creditors to eliminate or lower your debt and interest.
Then we have the “debt management” companies. They make arrangements with your creditors to pay your debts. You pay them a set amount, and they pay your creditors. They will charge a fee for this service.
My advice is to first make sure who this “debt counselor” works for, so you are not steered into a service that you don’t need, or that will actually do you more harm then good. Many of these companies are scams.
Better yet, do some research. There is a tremendous amount of FREE information available on the internet that shows you how to manage your own debts, and deal with creditors. The following links are a good place to start.
Yahoo Alert! I am not associated with these sites in any way. I offer them because they have a lot of good FREE information. LAY OFF ME!
January 1st, 2010 at 7:45 pm
Hi,
I used “Credit Solution” to settle my debt and improve my credit score .They managed to reduce my debt up to 58%.It’s legitimate.I came across this company on NBC News Special Edition.Check it out here:
January 28th, 2010 at 9:54 pm
Hi there
It is really very difficult to manage with the debt problems. Instead of approaching directly to the creditors, it is always better to take the help of professional companies. In order to settle your debts you need to locate a top performing debt settlement company. The Association of Settlement Companies is the best way by which you can find the best company who acts on your behalf and are consistently giving the best results. These companies are the member of this organization and are certified. Don’t run for the companies that are not a part of this organization as they may not have a professional attitude.