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Many Credit Counselors Losing Non-Profit Status

by Peter Andrew
Many Credit Counselors Losing Non-Profit Status

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If you’ve ever needed help with your debt payments, you may have used the services of a non-profit credit counseling service. Perhaps that non-profit status made you feel the agencies were more credible, not simply trying to make a buck off of your poor financial health. If so, the Washington Post reports that many of these credit counseling firms are losing that tax-exempt status, due to complaints that they are overcharging and pressuring customers, and due to the Internal Revenue Service’s view that they are paying no taxes while giving fat salaries to agency CEOs and funneling money out to for-profit affiliates.

So far, not one credit counseling agency has kept its tax-exempt status, out of over 30 that the IRS has audited. The article goes on to mention that at the same time credit counselors are losing their tax-exempt status, last year’s new bankruptcy law mandates that many new bankruptcy filers will have to use “approved” credit counselors as part of their bankruptcy program. If the IRS can’t find even one credit counselor that provides enough educational services to deserve its non-profit status, who will counsel bankruptcy filers?

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