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Nonprofit 501(c)3 Credit Counseling Group Kind of Offering Debt Settlement

It seems like it’s been several years now since I first started talking about the need for nonprofit credit counseling groups to offer debt settlement as a tool they can use to assist consumers with.

A reader sent me an email and pointed out that Community Credit Counseling Corporation out of New Jersey is now doing that openly. Apparently they are less afraid of losing their fairshare compensation than other credit counseling groups are.

Credit counseling organization that do not consider debt settlement as a viable tool to use in certain situations are doing their consumers a disservice.

But while I’m praising Community Credit Counseling Corp for getting into debt settlement I have to cringe a bit at the marketing on their site. It seems that their credit counseling program and debt settlement are still setup to guide consumers towards those solutions and away from bankruptcy.

Nonprofit 501(c)3 Credit Counseling Group Kind of Offering Debt Settlement

But from their page promoting their “debt settlement” solution it then appears they are not really settling the debt at all but pushing their debt management solution. – Source

Nonprofit 501(c)3 Credit Counseling Group Kind of Offering Debt Settlement

Their website seems to scream they are offering some type of debt settlement. The page title says Non-Profit Debt Settlement and the logo includes a statement about debt reduction as in settlement.

If Community Credit Counseling Corporation is not really offering a debt settlement solution where they are negotiating with creditors and settling debt for less than the amount due, the advertising on their site sure seems misleading, doesn’t it.

For an A+ BBB rated company they sure have some significant advertising message issues.

Nonprofit 501(c)3 Credit Counseling Group Kind of Offering Debt Settlement
  • Save up to 70% of your debt!
  • Settle and save up to 70% of your debt
  • Avoid bankruptcy
  • Eliminate harassing creditor calls
  • Get debt free fast
  • Settle your debt for less
  • Don’t be fooled settle your debt for less

The FTC has issued guidance about such claims. Ah, right, the FTC does not regulate nonprofit organizations, but the CFPB will.

I find it highly suspicious that Community Credit Counseling Corporation can “eliminate” creditor calls with a settlement approach, unless they are doing lumpsum settlements when a consumer has cash in hand. And what is a “harassing creditor call” as opposed to a collection call?

What Community Credit Counseling Corporation does not do is provide any evidence I could find as to the results their program obtains for the average person who enrolled. How much reduction off the original balance did they settle for? How fast did people get out of debt? Was avoiding bankruptcy in the best interest of the client? How many consumers saved 70% of their debt?

Their own “About Us” page doesn’t even mention their debt settlement service:

Community Credit Counseling Corp. offers credit counseling and debt management programs to consumers throughout the United States. It is our mission to help individuals and families become debt free through education and counseling.

Our certified credit counselors are familiar with various financial programs, so they may point you to little known sources for help. They may also help you realize immediate savings by helping you to reduce expenses or lower interest rates on some of your bills.

Our established relationships with America’s major lenders permit us to negotiate attractive benefits for you, thereby providing an alternative to bankruptcy and enabling you to regain control of your financial situations.

Community Credit Counseling Corp. is really an investment in your financial future. Our expertise will provide you a chance to become debt free.

Community Credit Counseling Corp. is a Licensed, Bonded and Accredited Non-profit (501)(c)(3) Organization. – Source

The reality here is probably that this nonprofit credit counseling group is a small company. They are probably trying to stretch their marketing a bit to capture additional clients.

It’s most likely time for the group to clarify their messaging and either clearly offer a debt settlement solution or give a couple of hours to clear up their potentially misleading advertising messages that could confuse consumers.

Nonprofit 501(c)3 Credit Counseling Group Kind of Offering Debt Settlement
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About Steve Rhode

Steve Rhode
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.
  • Angelo

    I agree the marketing is a bit aggressive but there’s a much bigger issues here.  The Feds/IRS say settlement
    is for profit and have come in and shut down settlement companies BUT the state of NJ says only a non profit can be licensed to do
    debt settlement…. So which is it?  Seems anyone compliant with
    the state licensing requirements in NJ would still need to worry about the IRS stepping in.  Damned if you do…damned if you dont!!

  • David L

    The IRS has shut down settlement companies that were set up as non-profits. They emphasized that the company’s focus must be education…not the settlement of debt, which they have considered a for-profit function.  I agree that this does provide for an interesting discussion on why the DMP programs are not considered for-profit.

    • http://GetOutOfDebt.org Steve Rhode

      Who specifically. I’ll gladly look into the specific case and share what I find.

      There is nothing that prohibits the type of financial education. But was the focus education or settling debt?

      • Angelo

        What kind of education can you teach a consumer who cannot afford a DM plan payments?  Unless I’m missing something, the only education would be to teach them how to settle their own debt.  The minute the non profit picks up the phone and speaks on behalf of the consumer then they are settling debt and in NJ, only a non profit can be licensed …its a crazy cycle lol 

  • David L

    Definitely significant non-FTC compliant marketing. Also, I thought the IRS had determined that debt settlement is a for profit function and does qualify as a non-profit function.

    • David L

      Meant to say does not qualify as a non-profit function

    • http://GetOutOfDebt.org Steve Rhode

      If the non-profit has it’s charitable status as an educational organization about financial matters, educating people about how to settle their debts seems to fall squarely into that. DMPs on the other hand are just as problematic. They are both interventions between the creditor and consumer to return money. Hard to approve one without the other.

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