Many credit counseling companies are losing their non-profit status

The IRS recently completed an audit of 60 credit counseling agencies. The result? More than 30 agencies are having their non-profit status and tax-exempt status revoked. The IRS was tipped off to these questionable non-profits by hundreds of consumer complaints. According to The Washington Post, "The IRS has been trying to determine if credit-counseling agencies were misusing their tax-exempt status to take advantage of financially strapped consumers."

It's not that credit counseling is a bad industry as a whole. While there are genuinely helpful and affordable companies available, there are also a more than a few rotten credit counseling agencies out there that are more interested in making millions by charging high rates to consumers in financial distress. Plus, it's a little known fact that these companies are also paid directly by banks and creditors.

The impact of revoking these non-profit statuses is yet to be seen. What will happen to consumers already working with these companies? What will happen to consumers who are required to obtain credit counseling under the new bankruptcy laws? Will the removal of a credit counselor's non-profit status cause them to charge consumers higher rates? Read more about the IRS decision online, learn how to spot unethical credit counselors and weigh in with your opinions in the comments section below.

Comments

[Sabrina]

anyone dealt with this [URL=http://www.moneysavingfreetips.com/delray-credit-counseling.html]delray credit counseling[/URL] corp before?

"Delray Credit Counseling is a non-profit educational service that offers a variety of financial educational services. Ranging from non-profit free credit counseling, debt consolidation, budgeting, understanding credit reports and scores as well as understanding credit card charges."

are they legit? government sponsored?

[EmilyPeters]

Hi Sabrina! I hadn't heard of Delray Credit Counseling before but I did a little research. The company is listed with the BBB in Florida - http://www.bbbsoutheastflorida.org/nis/newsearch2.asp?ID=1&strBCode=06330000&ComID=0633000019000498

The company appears legitimate and fairly standard for a credit counseling agency. They do not appear to be "government approved."

With any credit counseling agency, it is smart to investigate their fees, practices and reputation first. Ask the counselor for client references and for information about how their program may impact your credit scores.

[Renato Brintrup]

Sabrina,

Be extremely careful with Delray. As an ex-customer, I can to tell you the following:
-They do not disclose the fees, they are just taken.
-The information posted on the website, related to your personal account, is misleading.
-The creditors are not paid every month, even though you pay Delray monthly. They skip payments or simply delay them.
-Cummunication is very poor and defensive as heck.
-After two years of dealing with them, I've decided to deal with the creditors myself.
-In my $20,000.00 debt consolidation, they've kept $1,482.00, which averages a charge of $61.77 per month. Plus the 7% kickback from each payment that the creditors told me Delray is paid from the creditors themselves.

DO NOT forget to keep in contact with your creditors to check your accounts while you're in the consolidation program.

Lastly, I am not happy at all.

Best of luck,

Renato Brintrup

[Victhor]

Sabrina said it all about Delray Credit Counseling already, I just want to add to it a bit more. First off, they are the most RIDICULOUS people to talk to over the phone! They can't be wrong, and they are extremely defensive about the shitty service they provide! When they make a mistake or forget to mention something, it's never their fault, it's your faulty for not asking them. Trying to cancel the contract with them it's the most annoying thing ever, they'll keep telling you that the interest rate is going to go back up to where they normally were before their counseling program. I was already paying about $340 monthly on all my bills together and when I got involved with Delray Credit Counseling, I was actually paying the same or maybe more because of an added fee they have. So if they were saving me some money or lowering the interest rate, where did that money end up? In their pockets thats where. When I added all my bills through their program, it came close to about $280 dollars a month, but I was paying them $344 monthly to be exact for their service and everything. They worked things out with the creditors for their benefits pretty much and used me to benefit from. Just to get involved in the stupid program you have to pay upfront the first and last month, so me, I paid $340x2 which equaled to $680 total before getting started in their program. What a RIP OFF!!! Never again that's for sure. If I need a simple service such as consolidating my debt, I rather just do it myself. I was much better off doing it myself than getting involved with them. I never had a late payment in my life and thanks to me, I was able to watch their bad service all the way and made sure that none of their payments were late, and trust me, if it wasn't for me, a couple of my payments would have been late! I forgot how many times I had to call them up to cuss them out, and I really had to "cuss" them out trust me. All the money I put in to get started with them, I won't get to see one penny of it since I broke the contrat. That's probably how they make their money, they provide bad service and wait for people to quit so they can keep their money due to their STUPID policy and agreement.

JOKE of a company and NOT recommended!

Hope this helps as an eye opener.