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Bad Credit Repair Services Provide Assistance to Families with Financial Problems |
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Bad credit repair services primarily provide education and assistance to families with financial problems. However, bad credit repair services don't make any loans nor negotiate loans on behalf of debtors. They just provide bad credit repair services to help people negotiate their debts. Also, they don't refuse counseling to anyone who cannot pay or is not interested in a debt management plan. The fee that they charge for debt management plans is usually reasonable. And the fees aren't charged based on a percentage of the consumer's debt, the consumer's payments, or on projected or actual savings related to the debt management plan.
Bad credit repair services have a board of directors, 80% of which are unpaid volunteers who receive no payment for referring clients to other services. They are not related to a lender, bad credit repair operation, or a for-profit debt management service. Also, they never solicit voluntary contributions from clients, while those clients are being counseled or are on a debt management plan. Therefore, the main purpose of bad credit repair services is to provide education, in addition to debt management and counseling services and to waive fees in the case of financial hardship. They are also restricted from earning too much. According to tax laws, "the aggregate of the agency's debt management plan services during the 4-year period that includes the agency's current taxable year and the immediately preceding 3 taxable years, does not exceed 10% of the agency's total activities during such 4-year period." If these recommendations were enacted as written there would be no non-profit bad credit repair services at all. No agency in America could live up to this and survive. The more reputable the bad credit repair services, the more grievously they are punished by this proposed change to the tax code. All these restrictions and regulations are intended to protect consumers from being cheated. The bad credit repair services industry is notorious for its scams and frauds. And it's especially difficult since the victims are usually people in debt. But, the result of these protective regulations are not always positive, neither for the bad credit repair services industry nor for the consumer. In fact many of these regulations have had a negative impact on bad credit repair services as such. In trying to protect the customers from harm, the government has gone to the other extreme, not allowing counseling agencies to provide bad credit repair services. They have formulated all these restrictions with the idea that the bad credit repair industry is a nefarious industry and that they should stamp it out. However, in reality, many consumers do need assistance in improving their credit. To do this, they can approach a nonprofit consumer counseling agency (CCA). It's better to choose a nonprofit CCA than a fly-by-night bad credit repair operation. Instead, all these restricting conditions that bad credit repair services have to adhere by are forcing people who need credit repair help into the arms of the very profiteers who've made bad credit repair such an unsavory enterprise. In fact some of these regulations would be best removed. One is the restriction on referrals. Why should they be disallowed? The credit-counseling world is unfairly accused of not referring enough debtors to bankruptcy attorneys, but they'd also be criticized for getting a referral fee from a bankruptcy attorney. It's a no-win here. In fact, it makes sense for nonprofit credit counselors to have bankruptcy attorneys on their staff, to help those consumers who come in for counseling and have no other option. The problem, of course, is the profiteer types who refer debtors to a subsidiary for-profit bad credit repair service and gouge them. So, the removal of these restrictions is not without risk. But, the important thing to remember is that though there are many disreputable bad credit repair services out there, there are the trustworthy ones as well. It all depends on how discerning and careful the consumer is when he or she selects a bad credit repair service. |
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