Is Consumer Credit Counseling Or CCC "Good" Or "Bad"?
Posted in Finance on 09/08/2010 06:31 pm by admin
Louie Frias asked:
Depends…
On, how much debt you have.
What your intentions with counseling are.
On whether you understand how CCC on your credit report appears to a lender or underwriter.
On what an attorney advises you of.
On why you are even considering them in the first place.
Let’s begin with what “exactly” CCC is.
CCC’s are treated as non-profit entities whose goal in life is to assist a prospective home mortgage borrower or overwhelmed consumer manage their “out of control” debt. All CCC’s are governedy the FTC and anyone can own one. They are NOT a Federal Agency.
Credit card, auto loans, personal loans, school debt. By themselves these debts can be managed. However, when combined with increasing interest rate adjustments and dwindling personal income, they can quickly and easily become an alligator from which there is little hope of escape.
Many consumers are conditioned to react with knee-jerk responses to bankruptcy due to being innundated with attorneys advertising how easy it is to file bankruptcy.What they fail to disclose to the consumer is the changes in bankruptcy laws.Those laws were changed to prevent consumers from simply abusing credit. Charging astronomical amounts of goods and services with the intention of never paying them back – via bankruptcy.
Uninformed consumers who arrive at an attorneys office expecting this loophole to still be available are surely in for a disappointing shock. At that point morality steps in. Pay it back or not? Bankruptcy or CCC? Legalman pursuades a high percentage to go the route of bankruptcy.
Since I’m NOT an attorney, I cannot provide legal advice, however, I can provide information on why you might consider CCC.
In 2005 Congress enacted a new bankruptcy law that require consumers to attend pre-filing briefings and financial management skills classes by an approved credit counseling agency. A cursory investigation of numerous CCC websites reveal that while their “intent” is admirable, they do not fully disclose the effects of having CCC appear on a consumers credit report.
They’ll gladly tell you what’s on it and how to “manage” it through a debt management plan, but they won’t tell you how a mortgage underwriter will view their appearance. At best, they might attempt to explain “how” a FICO score works. (Lack of) Full disclosure is partly the reason Congress has investigated many over the years.
First understand that CCCS agencies represent the Credit Card industry – not the consumer. Think about it. When a consumer calls the card issuer, (which is VERY rare) the treatment received is overall demeaning; hence the avoidance of the call. Therefore, the card companies place a “middle-man” between themselves and the consumer. The card companies dictate the acceptable scope of terms and those terms are issued to the consumer.
So, if the consumer does not pay a fee for counseling, how does CCCS make money?
Credit card company subsidies AND the consumer may be presented with a bill for CCC services as well.
The consumer take a HUGE leap of faith in using CCC’s and here’s why. Remember, these are someone’s “business”. Businesses go “out of business” all the time. CCC’s exist to structure a repayment plan between the consumer and the creditor.
The “plan” is this. Negotiated, reduced monthly payments to your creditors.You send in adequate funds each month to CCC to cover the new monthly total.CCC then forwards the designated payment to the creditor. HERE’S the danger:
What if CCC fails to forward the payment? On time? Or in full? Any glich between CCC and the creditor and YOU get the harassing phone calls! Not CCC!
Some abuses have been so rampant, congress has even stepped in. Read about those here:
http://www.cccsnct.org/index2.php?option=com_content&do_pdf=1&id=53″
http://www.ftc.gov/os/2003/11/031120testimony.shtm
If you do decide to use a CCCS, investigate them. Ask for references.Ask if they supply you with monthly statements you can compare to your credit card and other debt statements. You need to account for every penny you send them and you need to be aware if those pennies are being received as scheduled.
Once you have accurate information, only then can you make an informed decision.
Victoria
Depends…
On, how much debt you have.
What your intentions with counseling are.
On whether you understand how CCC on your credit report appears to a lender or underwriter.
On what an attorney advises you of.
On why you are even considering them in the first place.
Let’s begin with what “exactly” CCC is.
CCC’s are treated as non-profit entities whose goal in life is to assist a prospective home mortgage borrower or overwhelmed consumer manage their “out of control” debt. All CCC’s are governedy the FTC and anyone can own one. They are NOT a Federal Agency.
Credit card, auto loans, personal loans, school debt. By themselves these debts can be managed. However, when combined with increasing interest rate adjustments and dwindling personal income, they can quickly and easily become an alligator from which there is little hope of escape.
Many consumers are conditioned to react with knee-jerk responses to bankruptcy due to being innundated with attorneys advertising how easy it is to file bankruptcy.What they fail to disclose to the consumer is the changes in bankruptcy laws.Those laws were changed to prevent consumers from simply abusing credit. Charging astronomical amounts of goods and services with the intention of never paying them back – via bankruptcy.
Uninformed consumers who arrive at an attorneys office expecting this loophole to still be available are surely in for a disappointing shock. At that point morality steps in. Pay it back or not? Bankruptcy or CCC? Legalman pursuades a high percentage to go the route of bankruptcy.
Since I’m NOT an attorney, I cannot provide legal advice, however, I can provide information on why you might consider CCC.
In 2005 Congress enacted a new bankruptcy law that require consumers to attend pre-filing briefings and financial management skills classes by an approved credit counseling agency. A cursory investigation of numerous CCC websites reveal that while their “intent” is admirable, they do not fully disclose the effects of having CCC appear on a consumers credit report.
They’ll gladly tell you what’s on it and how to “manage” it through a debt management plan, but they won’t tell you how a mortgage underwriter will view their appearance. At best, they might attempt to explain “how” a FICO score works. (Lack of) Full disclosure is partly the reason Congress has investigated many over the years.
First understand that CCCS agencies represent the Credit Card industry – not the consumer. Think about it. When a consumer calls the card issuer, (which is VERY rare) the treatment received is overall demeaning; hence the avoidance of the call. Therefore, the card companies place a “middle-man” between themselves and the consumer. The card companies dictate the acceptable scope of terms and those terms are issued to the consumer.
So, if the consumer does not pay a fee for counseling, how does CCCS make money?
Credit card company subsidies AND the consumer may be presented with a bill for CCC services as well.
The consumer take a HUGE leap of faith in using CCC’s and here’s why. Remember, these are someone’s “business”. Businesses go “out of business” all the time. CCC’s exist to structure a repayment plan between the consumer and the creditor.
The “plan” is this. Negotiated, reduced monthly payments to your creditors.You send in adequate funds each month to CCC to cover the new monthly total.CCC then forwards the designated payment to the creditor. HERE’S the danger:
What if CCC fails to forward the payment? On time? Or in full? Any glich between CCC and the creditor and YOU get the harassing phone calls! Not CCC!
Some abuses have been so rampant, congress has even stepped in. Read about those here:
http://www.cccsnct.org/index2.php?option=com_content&do_pdf=1&id=53″
http://www.ftc.gov/os/2003/11/031120testimony.shtm
If you do decide to use a CCCS, investigate them. Ask for references.Ask if they supply you with monthly statements you can compare to your credit card and other debt statements. You need to account for every penny you send them and you need to be aware if those pennies are being received as scheduled.
Once you have accurate information, only then can you make an informed decision.
Victoria