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Keep informed and educated about the credit counseling industry, credit and money management issues. In this section you'll find articles on a variety of topics. Just click on the title to get to the article. Remember to check back often for new information.

In the fall, the Pennsylvania legislature will be considering House Bill 2294 "Licensure of Debt Management Providers." A key component to the bill would allow for-profit debt relief companies to operate within the Commonwealth. Currently only non-profit providers may legally operate with in Pennsylvania.

Unfortunately there has been a great deal of misinformation regarding how non-profit credit counseling agencies operate that has been presented by those for-profit entities seeking this legislation change in order to legally do business in the Commonwealth.

Mark Guimond, executive director of the American Association of Debt Management Organizations (AADMO) — one of the main supporters of HB 2294 — has made erroneous public statements regarding non-profit credit counseling agencies that must be clarified.

In a July 9 Letter to the Editor in the Philadelphia Daily News, Guimond states that non-profit credit counseling agencies are not currently regulated in Pennsylvania and there is no governmental oversight of such agencies. To the contrary, the Internal Revenue Service strongly and thoroughly regulates non-profit credit counseling agencies that provide debt management services. Also, the Federal Pension Protection Act of 2006 and Pennsylvania’s Debt Pooling Statute set forth provisions for any non-profit agency offering debt management services.

AADMO claims the trend is to permit for-profit credit counseling to be lawful throughout the country. In reality, there is an all-out nationwide effort to change state laws to allow for-profit companies to operate because the IRS is flushing out and revoking the 501(c)3 statuses of for-profit debt management agencies that are currently masquerading as non-profit credit counseling agencies.

There is a clear difference between non-profit credit counseling agencies that may provide debt management services and for-profit debt management companies. A for-profit company exists to make a profit off of its customers, but a non-profit exists to profit its customers.

Where the Internal Revenue Service finds that a non-profit’s motive does not conform to that high standard, it is stripped of its non-profit status and many then choose to operate as for-profit companies.

Non-profit credit counseling agencies provide their clients with a comprehensive counseling session that includes an in-depth assessment of each client’s income, expenditures, debt and spending habits. Many for-profit companies offer what they call a "debt analysis" that is far less detailed and may not give the client a true picture of their financial situation.

AADMO also asserts that there are no fee caps, education requirements or trust account requirements for non-profit credit counseling agencies. The Internal Revenue Service reviews all aspects of the non-profit agency, including fees charged and trust accounts maintained. They also do investigations into the directors and officers of the agencies and education requirements of the agency employees. Further, many of the non-profit agencies operating within Pennsylvania are members of the National Foundation for Credit Counseling, an umbrella association for over 115 credit counseling agencies nation wide that promotes the highest member standards for credit counseling. The NFCC sets forth quality standards for its member agencies that address reasonable fees, education, trust accounts and other ethical standards.

To assert that non-profits are simply operating in Pennsylvania as lawless agencies, as AADMO claims, is incorrect and oversimplifies the situation. The issue of "law and order" has been addressed by the IRS.

The attempt by AADMO to push through legislation that would allow for-profit companies to work in Pennsylvania is nothing more than a clear attempt by the for-profit companies to work outside of the consumer protections instituted by the IRS and the United States Congress to ensure credit counseling and the offer of a debt management plan, if it fits a client’s needs, are in the best interest of the client and not profit-focused.