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Consumer Credit Counseling
Service debt-management plans
Dear Debt Adviser:
The Consumer Credit Counseling Service is supposed to be nonprofit.
So why does it reduce the payment going to your creditors by a percentage
of your payment? Not all companies that CCCS sends payments to agree
to the terms they have listed. The customer still has to pay the
full amount of what is owed. Not only do you pay more but CCCS gets
paid also. In a situation like this can you get your money back
from CCCS for misleading you to believe that you pay what you owe
and nothing else?
Uresti
Dear Uresti:
It sounds like you may not completely understand what Consumer Credit
Counseling Service calls "fair-share" contributions from
creditors and how they work. Let's first clear up something about
the name CCCS. CCCS is a trademarked name used by nonprofit members
of the 50-year-old National Foundation for Credit Counseling that
must meet strict quality standards of membership. There are many
newer and very different for profit and nonprofit organizations
with coincidentally similar-sounding names that are not members.
Now back to your questions. Many creditors are willing
to reduce interest rates, waive fees, or both, for "CCCS"
clients enrolled in a debt-management plan, in part, because the
creditor receives the money it is owed rather than it being lost
to bankruptcy or a write-off and in part because they recognize
that someone in trouble and who is serious enough to get professional
assistance deserves a break.
To help support the services of CCCS, creditors return
a percentage of the debt-management plan payment to CCCS in the
form of a voluntary fair-share contribution. Some creditors contribute
more, some less, some not at all. A CCCS will work with all of them
on the behalf of the client, regardless of the contribution or lack
thereof. The contribution in no way affects the client's account.
The entire payment to the creditor is credited to the CCCS client's
account.
At any of the CCCS offices across the country, you
may be charged a small monthly fee to maintain your debt-management
plan account, averaging $25 a month. However, a CCCS client's monthly
debt-management plan payment goes directly to the creditors listed
in the plan and the amounts are not reduced.
It is true that not all creditors will agree to terms.
There are some creditors that will not lower interest rates or make
other concessions on a CCCS client's account, but the large majority
will. Those creditors who will not may or may not be included in
the debt-management plan depending more often than not on the creditor's
policies or what is in the client's best interests.
In a typical session with CCCS, an independently certified
counselor will examine your financial situation and based on your
goals and personal situation determines what course of action would
benefit you most. It could be a debt-management plan, filing bankruptcy,
refinancing or just adjusting your living expenses. It's not a cookie-cutter
process, and it takes more than 20 minutes to do properly. If a
debt-management plan is agreed on, the counselor will provide you
with full disclosure of how the plan will work, the monthly payment
you will need to make to retire your debt, an estimate of the amount
of time you will be on the plan, and you will be asked to sign an
agreement. The document you sign discloses all the procedures followed
in a debt-management plan and includes information about complaint
resolution.
I understand how frustrating it can be when you are
digging yourself out of debt. For what its worth I'm proud of you
for trying! Sacrifices have to be made; spending habits need to
change; it can be stressful. I encourage you to stick with it! You
will be out of debt before you know it and on the way to a better
financial future.
I would also encourage you to contact your CCCS counselor
and let her or him explain any questions or problems you may have
with your current repayment plan.
A note to my readers: Not all counseling agencies
are created equal. Shop around for the agency that best meets your
needs. Make sure all your questions are answered and you fully understand
the repayment plan you will be entering before signing anything.
If you do enter a plan, follow the program closely.
The Debt Adviser, Steve Bucci,
is the president of Consumer Credit Counseling Service of Southern
New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.
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