Thank you for your question about Cambridge Credit Counseling, how credit counseling programs get paid, and whether a credit counseling service works for you or for the credit card companies.
Cambridge Credit Counseling went through a rough patch a few years ago, to put it mildly. During the time that Cambridge was operated under the leadership of its former principals, the Puccio brothers, complaints were lodged by Cambridge clients, the IRS, and state authorities, too. Be sure to also check out the consumer reviews and all of the feedback on this debt management provider here: Cambridge Credit Counseling Reviews.
The current management appears to have taken all the proper steps in order to re-establish Cambridge Credit as good player and has worked hard to overcome the concerns that led to several lawsuits and allegations that they are a scam type of firm. There was a monitor appointed by the Commonwealth of Massachusetts to oversee Cambridge's progress. The monitor filed a report that demonstrated the efforts Cambridge made to address and fix the problems that occurred under the former ownership. Based on this report, I think Cambridge can now be considered a company that offers a good credit counseling program, but be sure to do your own due diligence, given historical problems at Cambridge Credit Counseling.
Your question asked if it is true that Cambridge Credit Counseling would get paid by your credit card issuers, were you to enroll in the Cambridge program. It is true that many credit counseling programs receive compensation directly from the credit card companies - this does not make them a scam, as you reference, but it certainly is a part of their business that can create a conflict of interest and something that potential clients of any credit counseling firm that receives compensation from the credit card companies needs to be aware of. One form of compensation is called 'fair share.' Under 'fair share', credit card companies voluntarily return to the credit counseling agency a set percentage of the funds that are disbursed to them. This is very typical in debt management programs administered by credit counseling firms.
To some, this looks like a conflict of interest and scam. "How can a Consumer Credit Counseling Service (CCCS ) represent my best interests, if they are being paid by both me and by the credit card companies?" That seems like a reasonable question, but it misses a key point,. The proper questions to ask are, "Can a CCCS company help me?" and "Does the fact that CCCS programs receive fair share compensation directly from creditors prevent the CCCS from working to help me?"
While there are conflicts of interest, a good credit counseling firm, and Cambridge Credit Counseling may qualify in their current form, can still provide benefit. The money that the Consumer Credit Counseling Service receives does not influence it to act in the creditors' interests instead of yours. It is my opinion that you should focus on whether or not the benefits of a CCCS will help you resolve your problem or whether there is another option that would be more effective.
CCCS firms attempt to lower your interest rates with your creditors. You make one monthly payment to the CCCS firm. They then distribute that payment to your various creditors. If the CCCS firm can obtain interest rate concessions from your lenders or creditors, more of your monthly payment goes to your principal balance, thereby speeding up the time it takes to become debt free. The bottom line is that the interest rates the CCCS can obtain will help you or won't help you; it is entirely separate from whether or not Cambridge Credit or any other credit counseling program receives any money from the creditors.
Compare Debt Resolution Options
You stated that you wanted to evaluate and compare your debt consolidation options. I think that is a very smart choice. Make sure to look at the pros and cons of each option, so you can find the one that has the greatest chance of helping you accomplish your goals. First decide if credit counseling is the right solution for your needs, and then evaluate the best credit counseling firm to provide those services. Whether or not you decide to work with Cambridge Credit Counseling should depend on your own homework and due diligence.
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