Question:
Dear Steve,
I signed up for debt reduction management counseling and enrolled in a program with DRS Money Fit.
I’ll be paying them a monthly amount, which will go towards my balance with a few payday lenders with whom they have existing relationships.
Is DRS Money Fit credible or a scam?
Tarik
Answer:
Dear Tarik,
Questions about if some company or person is a scam are almost impossible to answer. The word scam means so many different things to different people.
For example, if someone lies and takes money from you, that’s a scam. But what if some company provides you with bad, incomplete, or self-serving advice? Is that a scam?
I took a look at the MoneyFit Debt Reduction Services IRS 990 return. They are a registered nonprofit credit counseling agency. – Source
As a credit counseling agency, it appears they want to “avoid bankruptcy” as they say on their home page.
They also provide mandatory counseling for people filing for bankruptcy, so they should understand the advantages of filing for bankruptcy.
The IRS return says, “THE ORGANIZATION HAS BEEN APPROVED BY THE OFFICE OF THE U.S. TRUSTEES TO PROVIDE BOTH THE PREÂBANKRUPTCY CREDIT COUNSELING BRIEFING, AND POSTÂBANKRUPTCY PERSONAL MANAGEMENT CLASSES, AS REQUIRED BY THE “BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005.” THE ORGANIZATION PROVIDES THE PREÂBANKRUPTCY CREDIT COUNSELING AND THE POSTÂBANKRUPTCY DEBTOR EDUCATION COURSE VIA THE INTERNET.”
But it is my opinion, after reading their website, they might be steering consumers away from bankruptcy and debt settlement rather than considering those tools as a valid option in the right situation.
For example, on their Debt Reduction Services page they say, “While most debt settlement companies operate under standards set by the law, it could still lead you to financial ruin if you’re not careful.” So why doesn’t MoneyFit offer debt settlement services if its goal is to protect consumers and help them avoid less reputable providers?
Their IRS 990 return says their mission is “TO PROMOTE FINANCIAL RESPONSIBILITY IN OUR CLIENTS AND COMMUNITY MEMBERS NATIONWIDE. WE ACCOMPLISH THIS THROUGH EDUCATIONAL PROGRAMS, COUNSELING, AND PERSONALIZED SERVICES. WE THUS EMPOWER INDIVIDUALS TO DEVELOP AND USE POSITIVE BUDGETING SKILLS AND EFFECTIVE SPENDING BEHAVIORS, TO USE CREDIT WISELY, AND TO PREVENT, MANAGE, AND ELIMINATE CONSUMER DEBT.”
I got a chuckle from the statement, “Stay away from debt settlement companies that provide 100% assurance. There is never a guarantee when dealing with debt.” Does that include MoneyFit?
Then the page goes into a “Finding Alternatives” section about credit counseling, balance transfer card, and consolidation loan. But what about bankruptcy? Especially since a Chapter 7 bankruptcy can eliminate your debt completely and legally in about 100 days.
Buried on that same page is this section:
“What Is The Best Debt Reduction Services Program?
The best approach to achieving a debt-free life will usually lead the consumer through the following options:
- Try to pay on your own, including negotiating with your creditors and the use of consolidation loans/balance transfers
- Work with a nonprofit consumer credit counseling agency
- Consider if debt settlement might be helpful, particularly with collection accounts
- Speak with a bankruptcy attorney”
I mostly agree with that advice, but I’m not certain they asked you to speak to a bankruptcy attorney before signing you up as a client. I would be surprised if they advised you about debt settlement since it does not appear they provide that option.
The other area I’m concerned about is if they evaluated your entire financial life and talked to you about future goals. This would require you to do the math on retirement savings. You can see an example using this online calculator.
They should have evaluated what the future retirement impact would be to you if you enrolled in a credit counseling debt management program or filed for bankruptcy and began using that money to save for retirement because you will need it!
If we go back to their mission statement, considering bankruptcy or debt settlement in the right situation would be financially responsible. Do they say they want consumers to “eliminate consumer debt,” but is it in selective ways?
Look, when I ran a credit counseling agency, we did a lot of advertising on avoiding bankruptcy. I’ve learned a lot since then. I felt I was right at the time, but I later learned I was blinded.
Here is what I said when reviewing the avoid bankruptcy messaging we gave consumers, “Man, I really blew it with that message. I seem to have scared people away from bankruptcy instead of providing them with more balanced information.
The message I should have included and spoken more about was that bankruptcy was a legal alternative to any debt relief approach and that bankruptcy would cease collections, terminate lawsuits, and forgive debt without tax implications.”
You can read my lessons learned about credit counseling here.
So Here is What I Suggest
Find a local bankruptcy attorney and go talk to them about your situation. Most offer free consultations. Get a better idea of what bankruptcy would mean for you, what it can return in the ability to save now for retirement, use the online calculator, and learn about how fast you can restore your credit after bankruptcy.
I have no doubt that MoneyFit can competently manage a credit counseling Debt Management Plan where they collect money from you and are compensated in returning it to your creditors.
Based on the public messages on their website, I do have concerns if you’ve had a comprehensive evaluation that considers all the options without bias before you make a choice.
Please update me in the comments with what you decide to do.

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Asked question about DRS MoneyFit and payday loans.
Thank you for your question. I’m eager to hear what you do.