Article : An Overview Of Consumer Credit Counseling

By LaToya Irby, About.com Guide

Consumer credit counseling is an alternative to filing bankruptcy. It is professional counseling that provides you with financial education and debt counseling according to your situation.

Once you consult with a credit counselor, the counselor will assess your debt level and work out a payment plan based on your income. Some credit counselors can negotiate lower interest rates and set up a debt management plan with your creditors.

How Credit Counseling Works

The credit counselor analyzes your credit situation including number of accounts, balance, minimum payment, balance due, and any past due account. The counselor then considers your monthly income and bills. Using this information, the counselor puts together a debt management plan (DMP) for paying off your debts. The proposed plan is sent to each of your creditors for approval.

Once your creditors agree to the DMP proposed by your counselor, you begin making payments to the credit counseling agency. The credit counselor disburses payment to each of your creditors in accordance with the DMP. In most cases, your credit accounts are closed to future charges as long as you are on the DMP.

Costs

A lot of credit counseling agencies claim to be non-profit. Even if the credit counseling agency says it’s non-profit, that doesn’t mean the services provided to you are free. In many cases there’s some kind of fee involved. Some agencies use your first payment to cover their fees, while others deduct a flat amount from your monthly payment. ...

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Article : Missed rate increase opt-out? You have 3 choices

Todd Ossenfort | Posted: Friday, April 2, 2010

Q: I missed the opt-out letter from my bank credit card. I have a $10,000 balance, and my former APR was 9.24 percent, but it was increased to 29.99 percent. I’ve been a customer since 2000. I’ve called several times to ask that my APR be reduced and/or a payment plan, and they said no because my account is current. I pay online and simply missed the opt-out offer.

This is my next to last debt to pay off so, of course, that’s good. I have been using the debt snowball method, which has really accelerated my payoffs. Any suggestions on what to do from here?

The interest per month is around $240, and it’s killing me. Because of the debt snowball method, I can make the minimum payment but just hate to lose so much money each month. I have $2,000 from my tax refund to apply to the card, but just hate losing so much money in the interim.

I have a part-time business that also is helping me pay more than the minimum each month. They told me that, because my account is in excellent standing that they have no programs to offer me, but if I miss a payment or pay less than the minimum, then call back because they will be able to assist me. Of course this is ludicrous to me since all I need is for them to lower my APR back to 9.24 percent.

A: Great job on paying down your debt and reaching the point that you have only one account left to pay off. I understand your frustration and looking at it from just your side, it seems unfair. However, if you were the creditors, you would understand their point of view as well. They decided, for whatever reason, that you were an increased credit risk and needed to change your annual percentage rate (APR) to reflect that.

Your creditors wrote you a letter explaining this decision and gave you the option to close your account and opt out of the increase in your APR. When they did not receive word from you that you wished to opt out, they increased your APR and left your account open.

On the surface, it may seem odd that your credit card issuer will not lower your APR and allow you to pay out your balance at the old rate. The sticking point for your creditors is that they appear to perceive you to be an increased risk and your account remains open — meaning you can increase your balance with additional charges. Because of these things, the issuer believes it must charge you an increased APR to minimize risk.

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Article : Can you really get a free credit report?

Consumer Credit Counseling Service
Apr,02. 2010

KNOXVILLE — A credit score is a vital component of overall credit health, and consumers should be proactive in learning what is in their credit report and how it may affect their score and their ability to secure credit. Consumers should beware, however, of misleading advertisements claiming offers of free credit reports that are a really a sales tactic to get consumers to purchase credit monitoring or repair services, sometimes for a hefty fee.

“Free credit reports, without strings attached, are available,” said Daru Burdge, president of Consumer Credit Counseling Service (CCCS) of East Tennessee. “Consumers need to know where to turn and not be enticed by online offers that promise free reports and then require them to sign up for programs and services that have a fee.”

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Article : 3 On Your Side: Financial Bootcamp

Apr 5, 2010 7:09 pm
PHILADELPHIA (CBS 3)

How well do you manage your money? If you spend too much and save too little in this economy that could spell disaster. But there are people that can help you get on the right track and it won't cost you a cent.

This Saturday Consumer Credit Counseling Service of Delaware Valley is holding "Philadelphia Saves: A Financial Boot Camp for Life. Kim Cooper of CCCS says, "People need a boot camp because it allows them to get a lot of information at one time."

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Article : Consumer Credit Counseling Services

From Deborah Fowles, former About.com Guide

Should You Use Them?
More and more people are turning to credit counselors to help them get out from under a mountain of debt. Some consumers are finding out the hard way, however, that not all credit counselors are created equal.

One so called "non-profit" counseling agency pockets your first month's check, which you assume is being applied to your debts, and calls it a "charitable contribution." Agencies like these may make you wary of seeking help from a consumer credit counseling agency, but if you know how to choose a reputable agency and you exercise a bit of caution, you can benefit from their services.

What Can I Expect From a Credit Counseling Agency?

Just what can you expect from a credit counseling agency? Besides providing general budgeting and money management advice to help you prevent future debt problems, they can negotiate with your creditors to get them to eliminate late fees, extend the term of your loan, or lower your interest rate. If your debt is burdensome enough, the credit counselor will encourage you to enter into a debt repayment plan requiring you to pay a set amount to the agency each month, which they then pay to your creditors.

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Article : Debt Consolidation and Consumer Credit Counseling

By Marjorie Salada

Debt consolidation and consumer credit counseling are both ways of eliminating your debt. Consumer credit counseling is actually a form of debt consolidation, but it does not involve a loan. Sometimes the term debt consolidation can also refer to a home equity loan that is used to pay off debt. Debt consolidation refers to a solution that consolidates your debts and allows you to make one monthly payment to cover all your debts.

A debt consolidation loan is a viable means of paying off your debt, but I do not recommend it. If you have credit card debt or are enrolled in credit counseling and do nothing, your creditors can report you to the credit bureau and make numerous collection calls, but that is about it. However, if you have a debt consolidation loan and cannot make the payments, the consequences are much more severe. Your creditor can start foreclosure proceedings on your home. Many people have debt consolidation loans, but there are better ways.

Consumer credit counseling is a form of debt consolidation, but it does not require a loan. Debt counseling is a way for people to get out of debt without incurring additional debt. A debt management agency can help you get on a plan that will help you have your unsecured debts paid off in five years or less. If it takes longer than five years, you may want to consider other debt relief options.

Your credit counselor will interact with you lenders and they will no longer be allowed to make collections calls to you as long as you follow the terms of the plan. There are many benefits to debt consolidation with a debt service. Here are just a few of the benefits you will see by consolidating with a credit counseling agency:

*Reduced and possibly eliminated interest rates
*One convenient payment each month
*No more collection calls
*No more fees
*Budgeting and financial education resources

The biggest part of being successful with a debt management plan is not getting into something that you don't think you can manage. If you are given a quote that you don't think you can handle, you are setting yourself up for failure if you accept the proposal.

Debt relief is something you need to go into with an open mind and the attitude that you are going to do what it takes to become debt free. The most difficult part of getting out of debt is recognizing that there is a problem and asking for the necessary debt help.

source : http://ezinearticles.com/?Debt-Consolidation-and-Consumer-Credit-Counseling&id=1289132

Article : Consumer Credit Counseling Services

By Neil D'silva

What are the functions of Consumer Credit Counseling Services?

Contrary to what most people think, or want to think, about consumer credit counseling services, these services are not just about mere counseling for your financial credit problems. They are much more than that. The following is a list of all the services that the consumer credit counselors will provide to you:-

• Of course, the first service is counseling itself. They will listen to your financial problem carefully. When you are speaking all these things out, you are yourself realizing the extent of the problem you are in. Anyways, the credit counseling services will try their best to counsel you verbally about your financial problems at the outset.
• The next step is to train you in financial management. The credit counseling services will sit with you and discuss how you can better manage your finances. They will prepare a budget for you and your family so that you can make the best use o the income you are getting and efficiently manage the payments you need to make.
• Most importantly, they will tell you of schemes in detail, such as the debt consolidating and debt refinancing plans by which you can solve all your credit problems. Debt consolidation means clumping all your individuals into a single loan which you can pay with greater ease. While, debt refinancing means getting your existing loan renewed through another lender at a cheaper rate of interest. The consumer credit counseling service will coach you in these plans, and will help you implement them too.

Why choose Consumer Credit Counseling Services?

It is very difficult for people who are deep in debt to manage their finances properly. Sometimes, these people might have the financial capacity to come out of their debts, but because they are not managing their loans properly, they are not able to solve the situation. This is where the consumer credit counseling services help. They will actually sit and discuss the problem with you and will tell you of ways by which you can be debt-free.

Most people when they approach consumer credit counseling services, they do not even know what debt consolidation or debt refinancing means. Even if they know about them, they have most likely a very hazy idea about it. It is the job of the counselor to make people aware of these viable solutions to their problems.

Credit counselors also become important when a person is to file for bankruptcy. In fact, the American law has made it compulsory for people to enroll into the programs of the credit counselors before their bankruptcy so that they can seek knowledge of how to avoid this sticky scenario the next time round.

Thus the consumer credit counseling services are not all out there to make a fast buck. Most of them have genuine intentions and a noble way of doing business.

Which Consumer Credit Counseling Services to avoid?

Many credit counseling services are nothing but scams, and you need to avoid them like the plague. Avoid all companies that are not registered with the government. Their programs have no value at all in the courts. Do not go for any consumer credit counseling services who want to push a particular policy of theirs. You must make sure that they are understanding your problem first, and working with you to find a solution for it.

source : http://ezinearticles.com/?Consumer-Credit-Counseling-Services&id=1009856

Article : Beware of Consumer Credit Counseling - Debt Negotiators

You've watched the TV commercials, heard the radio ads, saw the web banners and SPAM in your e-mail:

"LOWER your interest rates and payments!"

"Combine your bills into ONE LOW monthly payment!"

"We can eliminate up to 60% of your debt through negotiations!"

Who are those outfits and WHAT will you get?

They promise to reduce your debts and payments, often hyping their non profit status. The non profits are usually funded by the finance industry, the goal is to reduce bankruptcies. Creditors don't want the debts discharged, they rather forgive some interest and fees and collect whatever they can.

I also reviewed some of the contracts for debt negotiators and I was appalled by the outrageous fees charged to the people who would often qualify to discharge their entire unsecured debt through bankruptcy for just a few hundred dollars.

November 4, 2001 Washington Post article:

Easing the Credit Crunch?
AmeriDebt Is One of a Breed Of New Debt-Counseling Firms Whose Business Practices Are Drawing Regulators' Attention

"When his creditors didn't receive that month's payments, Reed said, he was charged late fees, over-the-limit penalties and higher interest rates. "My credit had been absolutely spotless, but now it's ruined," he said."

Paying off your debts will most likely NOT save your credit rating

Bankruptcy is often referred to as the "10 year mistake" by many of these debt negotiating and credit counseling companies.

Of course bankruptcy lowers your credit scores significantly for a few years. However, the credit counseling notation found on many credit reports for people who thought they were doing the "right thing" by paying back almost their entire debt can be worse than the bankruptcy.

Some people are lucky and those notations go away once the accounts are paid off. Unfortunately you can also end up with credit such as the scanned Equifax report below:

• "Consumer Credit Counseling" -- rated similar to bankruptcy
• "30 (or 60) days past due x times" -- LATE payments, while the consumer made EVERY payment on time
• "Pays 61-90 days" -- while the consumer made EVERY payment on time
• "Account closed by credit grantor" - often consumers have to close all accounts when entering the program

FACT: Your credit rating is most likely BETTER 2 years after discharging your debts than 3 years after entering a payment plan.

Yes, there WILL be creditors who won't offer you credit with a bankruptcy, even after several years. BUT, why would you need that credit?

Why would you even WANT a Home Depot charge card with a 20% interest rate when you have $$$$$ in the bank? Remember that when you discharge your debts, you then can start SAVING your money.

So, BEFORE you enter a repayment plan, you MUST get in writing that NO derogatory data will be placed on your credit reports as long as you make your payments on time. Should you find a company who is willing to do that, PLEASE post in the forum or fax that statement to me at (571) 222-1000.

........ read all from the source : bayhouse http://www.bayhouse.com/credit-counseling.shtml

Article : History of credit counseling

The first credit counseling agencies were created in 1951 in the United States when credit grantors created The National Foundation for Credit Counseling, or NFCC. According to W. Patrick Boisclair, Chairman of the NFCC's Board of Trustees, "the NFCC initially monitored legislative and regulatory activity for its retail credit members" and "also conducted public awareness campaigns on credit."(source) Their stated objective was to promote financial literacy and help consumers avoid bankruptcy, but they did not serve as collection agencies for the creditors. The first local credit counseling franchises emerged in the 1960's, offering education and counseling directly to consumers. NFCC is operated and the board of directors were major retailers, like JC Pennys and Sears, that used NFCC to act as a collection agency for bad debts.

In 1993, the “Association of Independent Consumer Credit Counseling Agencies,” or AICCCA, was founded, citing a need for “industry-wide standards of excellence and ethical conduct.” This formally organized the NFCC’s competition. The AICCCA was formed from the group of counselors who favored telephone delivery of debt management programs. The NFCC was, in the beginning, strongly opposed to this telephone business model, primarily favoring face-to-face counseling as a more effective solution. Eventually, all organizations practiced both phone and face-to-face processes with some agencies using large inbound call centers driven by mass media advertising.

The credit counseling industry’s third major trade organization is its largest: the American Association of Debt Management Organizations, or AADMO.

However, not all credit counseling agencies belong to a trade organization, nor are they required to do so; there are well over 1,000 active credit counseling organizations in the United States.

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made credit counseling a requirement for consumer debtors filing for Bankruptcy in the United States. In order to meet this requirement, during the 180-day period preceding the filing of bankruptcy, the debtor must complete a program with an approved nonprofit budget and credit counseling agency. Such a program may include, but is not limited to, one counseling session conducted by phone or over the internet. In addition, a post-filing debtor education credit counseling session is required in order to complete the bankruptcy process and to have your debts discharged.

Credit Counselling is also a growing industry in Europe, both for profit-making debt management companies and charities such as Christians Against Poverty and the Consumer Credit Counselling Service, Britain's largest debt advice charity.

source : http://en.wikipedia.org/wiki/Credit_counseling

Criticism of credit counseling (USA)

In the late 1980s and early 1990s, the number of credit and debt counseling agencies in America increased significantly. An antitrust lawsuit was filed against the NFCC, arguing that the presence of creditors on the NFCC’s Board of Directors constituted monopolistic practices. As a result of this litigation, creditors agreed to fund non-NFCC member agencies as well.

These sharp increases of credit counseling activity also created other, more serious issues in the industry. By the early 1990s, abuses by certain credit counseling organizations were so significant, it led to criticism of the entire industry.

A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors. This fee income, known as “Fair Share,” are contributions from the creditors that originally earned the agency 15% of the amount recovered. However, in recent years, Fair Share contributions have dwindled steadily, with contributions of 4-10% being the most common.

Still the NFCC considers bankcard companies to be one of their primary "constituents," and the NFCC website promotes the fact that they collect $5 billion for creditors each year. It also promotes their efforts to steer consumers away from bankruptcy.

The Federal Trade Commission has filed lawsuits against several credit counseling agencies, and continues to urge caution in choosing a credit counseling agency. The FTC has received more than 8,000 complaints from consumers about credit counselors, many concerning high or hidden fees and the inability to opt out of so-called “voluntary” contributions. The Better Business Bureau also reports high complaint levels about credit counseling.

The IRS also has weighed in on the subject of credit counseling, and has denied nonprofit 501(c)(3) tax-exempt status to around 30 of the nation's 1000 credit counseling agencies. Those 30 credit counseling agencies account for more than half of the industry's revenue. Audits of non-profit credit counseling agencies by the IRS are ongoing.

The lobby against credit counselors arises from the belief by the collection industry that the not-for-profit status of the credit counselors gives them an unfair financial and market advantage over them. The IRS apparently agrees. The tax exempt revocations seem to be centered around whether a tax exempt credit counselor actually performed their mandated mission by assisting the community at large, other than their whole attention to their own DMP customers in a "collection practice" (no one knows for sure however).

Congress has also investigated the credit counseling industry, and issued a report that said while some agencies are ethical, others charge excessive fees and provide poor service to consumers. The report also stated that NFCC member guidelines, if applied to the entire credit counseling industry, would go a long way toward eliminating the abuses they uncovered in some parts of the industry.

Other organizations have voiced criticisms of the credit counseling industry, often citing the Fair Share funding model as evidence that credit counselors serve the interests of the creditors over the interests of consumers, and that credit counselors are not forthcoming in speaking out about the actions of creditors for fear of losing what little funding remains. Credit counselors respond that their job is not to take sides but to negotiate with all parties equally to help successfully resolve debts. They further argue that the steady decline in Fair Share funding belies the notion that creditors are in control of the credit counseling industry.

Another common criticism of credit counseling is the assertion that participating in a Debt Management Plan will ruin a consumer’s credit. Fair Isaac Corporation, the company that pioneered the use of credit scores, states that participation in a Debt Management Plan has no effect on a consumer's FICO credit score. However, the participation in such a plan does appear on consumer credit reports, and the client may have more difficulty obtaining a car or home loan and be denied any further unsecured credit, such as a credit card. This is because lenders often use multiple risk factors to determine creditworthiness. While credit card banks offering relatively low-credit-line cards may use a credit score alone to approve a new account, a mortgage or car lender typically will scrutinize the entire credit report more extensively and verify employment and income information. Some lenders view a prospective customer's participation in a Debt Management Plan as indicative of the customer being unfit to manage their finances.

Additionally, mortgage loans backed by federal programs such as HUD or FHA have additional government underwriting guidelines in addition to the lender's own policies. HUD/FHA states their position on credit counseling is neutral and that a factor they will consider is whether the client has been adhering to the payment plan initially established through the credit counseling agency.^[1] The FHA recommends credit counseling programs to those who fear being denied a mortgage loan due to credit approval.^[2]

Counseling agencies have also been criticized for understating their clients' future responsibilities during the initial enrollment process. Agencies have been accused of telling clients to stop paying creditors directly and cease all telephone contact with creditors. This can result in accounts falling past due during the period that the client transitions into the DMP. Many clients come to the DMP with current accounts; they are simply seeking lower interest rates rather than needing help bringing their accounts current. It takes the average DMP 1-2 months to start making disbursements to creditors, during which time the accounts will fall past due if the client does not continue making direct payments to the creditors. Often this is impossible, however, because the client cannot afford to pay the DMP an advance payment as well as pay the creditors the normal monthly payment amounts. In this way a client's credit can be damaged as the accounts unintentionally fall past due.

Given this criticism, the industry is likely to be changed forever in the immediate future as it is scrutinized by both the consumer and government regulators over how they will be paid for the services they perform. In meantime, there will be no shortage of debt-burdened consumers who will now be facing a burgeoning, and more traditional, collection industry.

It should also be noted that many credit counseling services employ people hired off the street who are then trained in credit counseling. Thus the person helping you may not have any formal training in financial management other than what they received when they got hired as a credit counselor. This training is usually minimal and focused only on the services provided rather than a full course on financial management.

source : http://en.wikipedia.org/wiki/Credit_counseling

Article : Consumer Credit Counseling Services

By Cindy Holbrook

Real Estate Plus Editor

Does the dream of owning a home seem impossible? Are you struggling to make ends meet? Are your bills bigger then your paycheck? Are you only able to make the minimum payments on your credit cards?

Consumer Credit Counseling Service (CCCS) a local, nonprofit credit counseling agency, can help you solve your credit and debt problems. Our certified credit counselors can show you how to take control of your money and achieve your financial goals. Consumer Credit Counseling Service is a program of Lutheran Social Services of Mid-America and a member of the National Foundation of Credit Counseling.

Debt Management Program - Get out from under you financial burdens and set a course for a debt-free future through our Debt Management Program. The first step is to contact us by phone, email or website. We will send you a worksheet to complete, which includes your income and expenses, and a list of your creditors. Then contact us for an appointment. At your confidential appointment, a certified counselor will complete a budget assessment by reviewing your income, expenses, and debt levels. They will assist with identifying problems and the need for appropriate referrals. You may find that assistance with financial management is all you need to get back on track.

However, many people find they will benefit from our Debt Management Program, where we work with creditors to reduce monthly payments and interest to affordable levels until your debt is paid in full. As the only local credit counseling agency in the Miami Valley, you have your choice of in-person, telephone, or internet counseling. So, if you feel you are getting overextended, give us a call. We can’t help you if you wait too long.

Credit Report Reviews - Uncover the mystery of your credit report. These confidential sessions will explain your credit report, help you identify and address any problems and show you how to protect yourself from identify theft.

Consumer Education Programs - Learn more about a wide variety of consumer financial topics through our educational programs. A large selection of classroom and community presentations covering topics like budgeting, credit, debt management and banking basics is available.

Default Mortgage Counseling - Bring your mortgage up-to-date and keep it that way. Through individual counseling sessions we’ll help you explore all the possible solutions to prevent losing your home and analyze your cash flow to see how your income stacks up against your expenses. We’ll try to negotiate a solution with your loan provider. And we’ll help you prioritize your debts to avoid a situation like this in the future.

Springfield Office - Consumer Credit Counseling Service, 204 N. Fountain Avenue, Springfield, Ohio 45504, 937-325-2898 or 1-800-377-2432. Website: www.cccsmv.org.

The above information was provided by Consumer Credit Counseling Services of Miami Valley.

USDA Funding

U.S. Department of Agriculture (USDA) offers an exciting loan option in mortgage financing for eligible home loans: NO DOWN PAYMENT HOME LOANS. The loans are provided through USDA©ˆs Rural Development Program, and are available to purchase homes located in rural areas. Also, with the USDA loan program, your monthly payment may be subsidized, lowering your monthly payment and increasing the loan amount for which you are eligible. The objective of the program is to help lower income families or individuals who do not qualify for a home loan through conventional financing. This allows people to purchase a home now rather than later or in some cases, never. With the use of these no down payment loans and the payment subsidy, thousands of families who could not afford a home through conventional lenders now enjoy owning their own home. For further information, please contact the Hillsboro Office USDA Rural Development at 514 Harry Sauner Road, Hillsboro, Ohio 45133, or at (937) 393-1921.

Appeared in the March 12, 2006 issue of Real Estate Plus

source : http://realestate.springfieldnewssun.com/springfieldnewssun/featuredarticle.jsp?pg=featuredarticle20060312_2.htm