No matter where you go in the world, one question usually arises that separates factions into two camps. That lone contentious question is fee versus free. Does the organization providing advice or assistance charge a fee or do they give away help to debtors for free.

I find this question in the debt advice arena to be strange. On one hand, an argument is made that  people in financial trouble can’t afford to pay for help or that charging them for assistance is somehow taking advantage of them. What I find unusual about that position is that when people in debt have to pay for a plumber, mechanic or lawyer, they expect to pay for good and professional service, and they do.

Forget fee or free for a moment, debt advisors come in two camps as well. On one side we have the assembly of free advisors that are truly volunteers. These are good hearted people that donate their time and energy to help an organization to carry out a good mission. However, what the world does not appreciate is that volunteers can be exhausting. The organization has a risk and liability from putting poorly trained advisers on the front lines and volunteers often provide irregular service and those gaps in assistance can create huge problems. In the past Myvesta has used volunteers for help but only for providing internal administrative support and never debt advisers.

On the other side you have experienced and talented professionals that can deliver high quality services to debtors. Imagine the range of capabilities a debt advice group can offer with a staff that include professional negotiators, mediators, lawyers, employment specialist, tax experts, etc. When a client comes to a group like that they are going to walk away with the most experienced and most professional care. The reality is that talented professionals expect to be properly compensated for their services.

Now let’s look at funding. Normally funding comes in two flavours as well. There is the fee for service group, where the client pays for the services delivered and then there is the funding camp where money is given by grants or by creditors.

The reality is that when a group receives funding, the entity giving the funding expects certain results. If creditors are paying, they expect a return that benefits them. If governments are paying there is a whole host of reporting and admin costs and the future of that funding is always uncertain. It can be eliminated on the next funding schedule. If you are going to get grants for service, they are almost impossible to find.

Let’s look at creditor funding for a moment. In the US and UK creditors pay CCCS offices, funds based on how much the groups collect in their debt management plans (DMP). If the debt advice group is compensated based on collections it can damage the mission of the debt adviser and make them more focused on pleasing the funding source than offering advice that goes after bad actions of creditors. No matter how well intentioned you are, there comes a time when a group with a good heart will find conflict between portraying themselves as an independent or non-biased debt adviser and protecting the source of funding that keeps them going.

After having looked at and delivered services under all of these different models I would have to say, without a doubt, that the model that delivers the highest level and best quality of services is the fee model where the debtor pays. Several other reasons make this approach work exceedingly well.

First, when the debtor pays a fee for service they are typically more web to the process. They have made an investment and actively want to participate. Second, when clients pay there is no doubt who the focus and allegiance is for, the client. Finally, when a fair and reasonable fee is paid for the service delivered, the organization can use those funds to pay to employ talented professionals that can deliver a high level of service, the client wins.

The unintended consequence of not charging appropriate fees for service is that many groups that are underfunded, don’t survive. An assistance organization can do more good and offer greater care for longer if they can remain fully funded and maintain a staff that can exist year after year and carry forward those learned experiences to benefit the next person that reaches out for help.

I’ve been helping people with financial problems since 1994 and without a doubt my feet are fully entrenched in the fee for service camp. Charging a fee does not mean you are taking advantage of the debtor. Fees can be charged that are fair and reasonable. However, when an organization is going to develop a fee for service price they need to make sure that they have fully calculated the actual cost for delivering that service and adding a reasonable amount for profit on top of that. It does nobody any good to charge less than the actual cost.

Having said all of that, Myvesta always advocates the Robin Hood fee schedule. In this model greater income from one service is used to provide other services that don’t receive as much funding. For example, higher fees from one service can be used to pay staff professionals to help advise consumers regarding interview skills, resume review, mock interview training and other skills that can help people to find jobs that pay higher salaries. Money problems can also be resolved by increasing income and not just focusing on reducing expenses.

If is possible to operate as a for-profit company and to deliver a service as a social enterprise that benefits society and not takes advantage of people. Being a charity, does not make you a saint and the world is full of charities that take advantage of people, they just don't pay taxes. Do a good job, charge a fair price and be proud that you offer the best assistance possible.