Shortsighted IRS Regulations Will Severely Injure Consumers - Law Changes Will Force More Consumers Into Bankruptcy
Newly proposed IRS regulations could harm consumers, force credit counseling agencies out of business and increase the number of people filing bankruptcy.
ROCKVILLE, MD (PRWEB) February 5, 2005
Newly proposed regulations issued by the Internal Revenue Service on January 27, 2005 could severely hinder the ability of consumers to get assistance when facing financial problems. The proposed changes to laws governing credit counseling organizations severely restrict their activities and ability to raise funds while providing valuable services to people facing financial peril. The anticipated changes in compliance with existing tax codes offering non-profit status to credit counseling organizations could effectively shut down a system that is the current last resource to assist consumers with financial problems, other than bankruptcy attorneys.
The proposed changes would limit the amount of time agencies can spend on debt management plans, their current main source of income, to less than 10 percent of their total activities, without allowing any meaningful way for agencies to support themselves to provide other needed services.
“While the government regulators are trying to do the right thing by curbing deceptive practices in the credit counseling industry, they are being extremely shortsighted on what is actually best for the consumer,” said Steve Rhode, president of Myvesta, a nonprofit consumer education organization. “While the current system of credit counseling is not perfect nor 100% independent from creditor control, it is the only option available when consumers need help. These new regulations will more than likely force the end of credit counseling and leave people abandoned in difficult and traumatic times in their lives.”
According to Rhode, there is a need for positive reform and the creation of truly independent organizations that are separate from creditor control and funding that the public can turn to in times of need for professional advice and assistance.
“Without any independent organizations, consumers will be at the absolute mercy of their creditors,” Rhode said. “The only meaningful option for people in financial distress will be bankruptcy, and the numbers of people filing will surely rise.”
“The IRS is looking into legislation that will take away an important service without creating any other new and better solutions,” Rhode added. “We need to create a dialog between all the groups involved in this crisis to do what is best for the individuals and families who are ultimately affected by these decisions. It’s time the parties on all sides of this issue stop trying to further their individual agendas and put the welfare of the people that need help first.”
Myvesta is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta. org online.
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