Considering the fact that there are non-profit debt relief companies, you may be wondering why a consumer would consider using a for-profit company instead. The assumption here is that a non-profit company is going to charge less for its services than its for-profit counterpart. While this seems like a logical assumption to make, the truth is that the playing field among debt relief companies is not as balanced as you might think, at least not where the non-profit debt relief companies are concerned.

Non-profit debt relief companies do exist, so it’s a fair question for a consumer to ask why someone would instead opt for a for-profit company as their choice of a debt solution company. Surprising as it may seem, the profit status of a debt solution company should have absolutely no bearing whatsoever on whether or not it is chosen by the consumer. How could this be the case? Because non-profit debt relief companies are all a single type of debt solution, and there are 5 main debt solutions available. Due to this fact, the choice of a non-profit precludes the choice of any of the other 4 debt solutions. So in choosing the non-profit company the consumer is also choosing the solution itself. Since each of the debt solutions is geared towards a specific level of severity of the debt problem, it would be foolish to blindly choose any of the solutions and expect it to be the appropriate choice.

To try to clarify, all non-profit debt relief companies represent only one specific type of debt relief solution, and therefore a preference for non-profit debt relief companies doesn’t include a choice between available solutions. Furthermore, the debt relief companies which offer this particular debt relief solution are all non-profit, so there is not even a choice for the consumer between profit and non-profit debt relief companies within this one debt solution. The solution represented by the non-profit debt relief companies is known as debt management (also known as consumer credit counseling), and this solution is only one of several that may be appropriately chosen by a consumer depending on the debt situation itself. Since the profit status of the company rightfully should be of secondary importance to choosing the most effective solution, the issue of profit status becomes a moot point.

To be more specific, all of the non-profit debt relief companies being referred to are debt management companies (also known as consumer credit counseling agencies).  It will be helpful to take a look at the bigger picture of the available debt relief solutions. To give a more complete picture, the list below shows where the debt management companies fit in relative to the other debt solutions, going from the least severe debt problems to the most severe:

1. Discipline and Thrift

2. Debt Consolidation

3. Debt Management or Credit Counseling

4. Debt Settlement

5. Bankruptcy

As can be seen here, the non-profit debt management companies represent one type of debt solution. The real task for the consumer is to determine which of these solutions will provide the appropriate level of assistance that is required. When that decision has been made, the profit status of the debt relief company will already have been decided as well.

Now that you have a clearer picture of the factors involved, it should be evident that the consumer’s most crucial task is deciding which of the above 5 solutions is most appropriate for them. If and only if debt management emerges as the best solution does the issue of profit status emerge, yet it doesn’t contribute at all to the selection process. At the point the debt management option has been decided, the issue of profit status has already been decided as well because all debt management companies operate with a non-profit status. 

So why is it that all the consumer credit counseling agencies are non-profit? Because they are required to offer free counseling and financial education services, and must put a cap on the fees they can charge for their debt management programs. They are considered to be public service organizations because of these benefits that they provide consumers, which in turn are a benefit to society as a whole. As they aren’t subject to income taxes, these debt relief companies are regulated by the IRS.