Talk:Credit counseling

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Requested additions

I'd like to propose a few additions to this page:

In the Overview section, before the last paragraph, please add:

In the United States, nonprofit credit counseling agencies have historically been funded in part by "fair share" payments: creditors participating in a debt management plan voluntarily return to the agency a percentage of the payments they receive through the plan.

Fair share rates declined from 12–15 percent of plan payments in the 1990s to 8 percent in 2001 and about 5 percent by 2010, and creditors increasingly tied the payments to consumers' completion of plans.

In the Criticism section, please add the following text between the second and third paragraphs:

Debt management plans also involve costs and limitations. Under a DMP, the consumer repays 100 percent of the principal owed, plus interest at reduced rates, typically over three to five years; creditors are generally unwilling to reduce principal on debts enrolled in a plan.

Enrollment typically requires closing the credit card accounts included in the plan.

Creditor participation in a DMP is voluntary, and consumers are screened for eligibility; a 2006–2007 industry survey found that 30 percent of counseled consumers could not qualify for a plan because of insufficient income.

Counseling agencies have historically been funded in part through "fair share" payments - a percentage of plan payments returned to the agency by creditors - an arrangement that observers have described as a potential conflict of interest, since it can create incentives to enroll consumers in repayment plans even when other options might serve them better.

Rigorous independent research on DMP outcomes remains limited, though available studies have found that consumers who enroll in and begin plans experience lower rates of bankruptcy and greater credit score improvement than similar consumers who do not enroll.

Under Regulations by country, in the United States subsection, please add:

Under Section 501(q) of the Internal Revenue Code, enacted as part of the Pension Protection Act of 2006, revenue that a tax-exempt credit counseling organization receives from creditors attributable to debt management plan services may not exceed 50 percent of its total revenue; the cap was phased in for existing organizations between 2008 and 2011.

Following the cap, some creditors shifted support to grants not tied to debt management plan services, and client fees and government housing counseling funds grew as a share of agency revenue.

References

Thank you for your input, PurpleSherpa (talk) 13:57, 5 August 2026 (UTC)