One of the exploding growth industries in North America (aside from the cheque cashing industry) is the Debt Counseling industry. There are many (many) of these service companies out there, that are looking for folks that are in over their head (in terms of their finances). These companies portray themselves as wanting to help us all get back on the straight and narrow, and living within our own means (or at least out of debt).
The advertising on radio, TV, and even on the web is quite slick and very alluring, but what you must ask yourself when dealing with any service company is, what is in it for them? How do these companies make money? Unless this is an organization that is run as a non-profit, out-reach program, they are making money doing something while helping you out too.
I have included a video I found on-line of one of these sites (please read the caveat before hand). If you watch it, you might think these people are out to help me get out of debt, but ask yourself while watching this video:
- How are these folks making money, and staying in business (and are able to pay for slick advertising like this)?
- Can’t I do this all myself?
Caveat:inclusion of this video is not an endorsement, nor am I receiving any payment for including this video in my post.
Where might they make money? This is all speculation on my part, but my guess would be:
- They have a deal with a lot of creditors, where they get a finder’s fee, or the like for getting dead beat debtors to pay off (not very likely).
- The structured settlement put in place by them, they get a cut on? That seems more likely to me.
If they charge you a fee up front for all of this, I might be more inclined to believe these folks aren’t taking a bite out of you, as part of your debt pay out plan, but even then, maybe they are taking two bites at the same apple?
I am willing to listen to anyone in the industry who can explain where these companies make their money, so if you are part of this industry, drop me a line and I am willing to listen.
For my readers, remember, I think you can do all of this yourself (even calling creditors to create a settlement or pay down plan), so remember that before using these services.