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True ownership of CESI. – Thomas

I am a bankruptcy attorney who frequently has clients who have been paying credit counseling companies obscene amounts without receiving any relief.

Further, it seems these companies pick-and-choose the creditors to which they will remit payment. What, if any, financial affiliations do these companies have with the creditors?

For example, does CESI have a financial incentive to pay one creditor over another (i.e. does a creditor own CESI and essentially pay itself?)?

Thomas

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The Answer

Dear Thomas,

You raise a number of interesting issues.

When it comes to CESI (Consumer Education Services, Inc.), they are a non-stock corporation setup as a nonprofit organization and recognized as a tax exempt organization by the Internal Revenue Service.

As a nonprofit corporation there are no “owners” and no equity or stock that can be owned by any entity. Since they are a non-profit corporation you can see their last public tax return online, as you can with other IRS approved nonprofits.

A nonprofit credit counseling group can be either an IRS approved organization or only a state nonprofit company and not recognized by the IRS.

As far as who gets paid first, the reality is it comes down to the commission creditors pay the credit counseling groups. This commission for the return of money is commonly called fairshare.

Fairshare works like this. Let’s say Discover Card gives a 4% fairshare payment to a credit counseling agency. Some creditors will let counseling agencies withhold their commission, some will require to be invoiced and pay later. In this case for every $100 the agency remits they would get $4 in commission, either deducted or invoiced. If it was deducted the credit counseling group would send $96 to the creditor and the creditor would post $100 to the consumer account with that creditor.

A credit counseling organization is more likely to prioritize payment by which creditor provides the most compensation or holds the biggest hammer over their head regarding future funding.

While creditors do not “own” credit counseling groups, they do control them. This is evidenced by the fact they have made the entire credit counseling industry afraid to speak out in support of consumers.

Credit counseling groups are afraid to go against the wishes of creditors in fear of losing the little funding creditors still give them today. What we have today is essentially a weight loss industry that is controlled by the snack food manufactures.

So you see that while there may not be an “ownership” issue there is a substantial influence problem that persists today across the entire credit counseling industry at-large.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

True ownership of CESI.   Thomas
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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • http://Community.CareOneCredit.com Suzanne Coblentz

    Steve and Guest,
     
    Thank you for highlighting fair share payments from creditors as one of the major distinctions between non-profit providers and for-profit debt relief services providers. For-profit debt relief providers, like CareOne Services, Inc., do not accept fair share payments from creditors. As a result fair share compensation is not a factor in our ability to negotiate on behalf of our customers.
     
    Explaining fair share has been a focus of our consumer advocacy and education for consumers searching for debt relief providers. We at CareOne believe that consumers need to be truly informed of various ways for-profit and non-profit providers are different, like the lack of FTC oversight for non-profit providers in addition to the fair share process.
     
    Suzanne Coblentz
    CareOne Services, Inc.

    • Errick

      What Steve and Suzanne are trying to steer you away from:  Amerix Corporation, which wholly owns CareOne Services, holds a security interest on all of CESI’s debt management plans with consumers, their books and records and documentation, and all proceeds and rights to payments therefrom.  You can check it out at the NC Secretary of State website.

      This is why the CESI customers are in such peril.  If Amerix loses on the consent agreement, they will just enforce their security interest.  Steve was sent this information some time ago, but doesn’t want you to know.

    • Errick

      What Steve and Suzanne are trying to steer you away from:  Amerix Corporation, which wholly owns CareOne Services, holds a security interest on all of CESI’s debt management plans with consumers, their books and records and documentation, and all proceeds and rights to payments therefrom.  You can check it out at the NC Secretary of State website.

      This is why the CESI customers are in such peril.  If Amerix loses on the consent agreement, they will just enforce their security interest.  Steve was sent this information some time ago, but doesn’t want you to know.

      • http://GetOutOfDebt.org Steve Rhode

        Errick,

        I have no clue why you constantly want to go after me personally but so be it. You make it sound as if I’ve covered something up. I have not. In fact I even give you a voice to state your points of view. Let’s just be gentlemen and leave the name calling out if it. It does not help your credibility.

        If you have some image of some document you want to include that you feel I have not shared, why haven’t you? You can attach an image to any comment.

        There are other articles on the site that are dedicated to the current Amerix v CESI lawsuit going on.

        This question was about ownership. Your statements are not about ownership.

      • Errick

        My credibility is irrelevant. Believe me or not. The records speak for themselves. I only have PDF’s so I need to send them through the form.

        And yes, if you have a lien against all the clients, their records, and their accounts and proceeds, you are co-owner of the company.

      • Errick

        My credibility is irrelevant. Believe me or not. The records speak for themselves. I only have PDF’s so I need to send them through the form.

        And yes, if you have a lien against all the clients, their records, and their accounts and proceeds, you are co-owner of the company.

      • http://GetOutOfDebt.org Steve Rhode

        Take a screen shot of the PDF or export the pages as images and attach them.

        A lien does not make you a co-owner. Companies have all sorts of liens, recorded or otherwise, and it is evidence of a liability, not ownership.

      • Errick

        I guess the important thing is, Thomas has a useful answer to his question now.  CESI’s assets and most of its cash flow go to a for-profit debt relief servicing company called Amerix, who also owns a for-profit debt relief company called CareOne.  It’s they that have the inside deals with the creditors.  This is how they avoid RICO and antitrust issues.  Don’t believe me, research it.  Happy hunting!

      • Errick

        There you should have those now.  You will find similar filings in Florida and Washington securing the clients of non-profit debt relief companies in those states in favor of Amerix, and in Maryland in favor of CareOne Services.  They have all been loaned money in exchange for a lien on their clients.

      • http://GetOutOfDebt.org Steve Rhode

        I got your PDFs but I’m not going to do your work for you. I told you how you can post them if that’s what you want to do. A UCC-1 is not a statement of ownership.

  • Guest

    It is worth mentioning here that not all debt relief providers accept fair share payments.

    • http://GetOutOfDebt.org Steve Rhode

      That’s correct. But in my experience the only ones that do not are for-profit companies that are not eligible to receive them or a non-profit company that is not recognized by the creditors.

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