Many finance consumers have accumulated to much credit card debt or other nonsecured high interest debt. These folks often become overwhelmed with the vast amounts of unsecured consumer debt that they have accumulated over the last decade during the credit boom.







Now that we are in more of a credit crunch folks have run out of credit as all the major lenders have reined in credit limits and raised credit standards. Consumers are now left with large amounts of high interest debt and lower lines of credit.

Once a consumer reaches a point where they are no longer able to make the minimum payments on their credit card accounts, consumer loans, and other high interest unsecured debt, they will seek debt help.

If a consumer reviews much of the media available online, TV, government outlets, or wherever they will find that the standard or typical advice is to go seek help through a nonprofit debt management firm. Even further they are generally told to avoid debt settlement firms who charge money for their services. 

Now perhaps on the surface this advice makes some sense.

However if you examine the truth about nonprofit debt management operations and models then it is plain to see that there are some serious conflicts of interest and hidden powers of influence are hard at work to keep the American consumer dumb and misinformed.

Key Highlights of Conflicting Interest and Trickery from Nonprofit Debt Management

The Money Trail

If I could share but one thought, one notion, or one piece of advice to all it would be this; Always follow the money and other incentives to find where true interests are targeted.

If you examine the nonprofit debt management business model it is clear that these organizations are lender interest focused. They are rewarded in the form of a comission that is determined as a % of what you end up paying the lender. This model is almost identical to a debt collector business model. The only difference is that the lender can write off the expense as a donation and the nonprofit debt management firm does not have to pay taxes on the comission becuase they are allowed to lie and say that it is a donation.

Pretty clever.

Now... I don't know about you but for myself I would much rather hire a professional with my interests in mind. I want to pay someone who is not on my lenders payroll. Think of it this way; if your "Ex-Spouse" were to sue you would you ask her attorney to negotiate on your behalf?

Bingo.

llegal to Pay a Professional to Represent the Consumers Interest

The FTC has more or less made it illegal to hire a proffesional to represent your interests. They have passed laws that forbid debt settlement companies from collecting any sort of revenue untill after the settlement is obtained. In other words these firms must finance the 3 to 18 months of work it takes to negotiate a debt settlement workout. They must and are forced to lend to folks whom have a very poor credit history.

Hmmmm...

The FTC reccomends that you seek help from these so called nonprofit agencies who get paid based on the amount of money they are able to get you to pay your lender. Just like a debt collector.

The Debt Collectors

Debt Collectors in my opinion, play the biggest roll in this scheme to undermine the financially distressed consumers of America.

They sabotage the relationship, efforts,  and contract agreement between debt help specialists who represent the consumers best interest and the consumer.

This happens when the collection agents contact consumers who are late and say that no on is negotiating on their behalf or they will say that no settlement offer will be given, and they will claim to be the the lender or creditor.

The truth of the matter is that debt collector knows nothing about loss mitigation, finance, your account or any of that. They are paid to scare you into sending money. Period.

The consumer believes that they are talking to an informed represenitive of their lender that works on their account. Thus they are shocked and terrified to hear the false news that they are being scamed by whom ever they are paying to negotiate the debt.

The consumer then will stop funding the escrow account that has been accumulating funds to allow for a lump sum settlement. The consumer sabotages their own interests and efforts by taking this action. They lose a ton of money and are worst off then where they started.

Slander Campaign

To make matters worst the debt collectors get away with this. The lenders have learned to enjoy this part of the deal. Instead of the debt collectors catching heat from the media it is instead the debt settlement firm that is blamed. The consumer will usually take action against the debt settlement firm and not the debt collector whom they technically don't even understand that they exist as they still are under the impression that the debt collector is the lender. But that is not true it would be way to much of a liability for a lender to hire folks as an employee to take part in these illegal activities. So when the consumer trys to take action they can not becuase the debt settlement firm played absloutely no part in the unfortunate activities and decisions that were executed by the borrower themselves, undermining their own efforts and their own personal finances.

By simply hiring a private contractor to carry out the illegal activities debt collectors operate by the lender is far less likely to get in any trouble. Plus it is cheaper becuase the agents are not educated nor do they generally know anytging about finance.

Meanwhile the consumer still rants and raves about the debt settlement company who has essentialy been shot by the person they were trying to help.

Folks in the media don't understand either and they typically just report the story that is told by the government or consumer.

This is a pluage of financial ignorance that borders on collective dementia