I had an article from Consumer's Reports on this subject. It was about five years old but it talked about how even the nonprofit ones can be a bad choice. They also change names frequently, so that does not help. Things to watch for included making sure that you read all the fine print. Some places would figure out what your monthly payment to them would be, then would keep the first payment and NOT PAY THE CREDITORS! That put you another month in arrears! They said in the fine print that the first month's payment was a "contribution" to them as a charitable organization. It really can be a racket. The article is at work, and I won't go to that workplace until Tuesday. I'll try to remember to bring the article home.

My friend used Christian Credit Counselors. She did it all over the internet. She said it helped. I don't know if they are nation-wide or not. I don't know if "Christian" would make it any better than any other, either.

Thanks Nancy. I have consumer reports at home, so I'll look for that article. All of a sudden her finances are better - her car was hit and she got the money to fix it, but will use it instead to pay some bills. sheeesh. A good role model for my daughter. She sees what NOT to do.
Thanks.

Greetings all,

Sometimes when they make a fuss about their being "Christian" I think it a good time to get a good drip (sorry ... meant to say "grip", but this was what turned up) on my wallet.

Being out of country, I have no idea whether this idea applies in this situation.

(formerly Rev.) Ed Baker

Unless the car is an old beater and is completely paid off, taking the insurance money to pay other things and leaving it damaged is a bad idea. It will cost her later when she goes to get a new car and this one is worth essentially nothing. Failing to properly maintain an expensive item like a car is just one more symptom of a person who can't handle money.

Before contacting any credit counselor, a person should contact the creditors himself or herself and attempt to negotiate a payment plan. Many will suspend interest, accept lower payments, or sometimes even accept less than the full amount due if a person contacts them to ask for assistance.

If her situation is very bad, don't forget that the bankruptcy laws will probably be changing soon, and this avenue of relief will essentially be closed off to many people at some point in the near future. If it's something she may need to do, she should talk to a bankruptcy attorney for advice sooner rather than later.

Outside of personalities, one debt counseling organization is no better than any other, Christian or not. They all work off the same premise and have to follow all the same rules and guidelines.

At least once per month a list of Credit Grantors is delivered to all the Credit Counseling Organizations. On that list it spells out exactly what each creditor will accept or won't accept. No agency has any advantage over another.

Here's the real kicker. Bankruptcy is easier on your credit than going to a Credit Counselor. Credit Counseling stays on your credit, bankruptcy does not. When applying for credit and a credit grantor sees you are on a credit counseling service or have been they treat it worse than bankruptcy. They know you most likely still have debts you can't pay and that you don't know how to manage your money.

Take a look at a credit report that has had someone file for bankruptcy and in a few years their scores are back to normal. But, if they used a credit counselor their scores are still far below what they should be.

If you deal with your creditors yourself and pay ALL your creditors on-time for 12 to 24 months, your credit will be restored. It doesn't take a Credit Counseling Organization to do that. You can negotiate exactly the same on your own.

Bankruptcy allows you to put secured and non-secured in the plan with payments consistently 50% or more less than a Credit Counselor and without any creditor calls. Within 6 months you will have companies sending you more credit cards. You will not get that at all with a Credit Counselor.

I just spent 20 years in that industry and I've had it with all the lies that we are asked to make people believe about credit and budgeting. We collected millions and millions of dollars in the form of contributions back from creditors that came out of customers payments that the creditors got to write-off. The whole non-profit credit counseling business is a farce and VERY PROFITABLE.

In 1991 there was an article in the San Francisco Chronicle called, "The Ties That Bind", about the incestuous relationship with Consumer Credit Counseling Service and the Credit Grantors (i.e. Credit Card Companies and Store Merchant Cards). ItÂs sick and wrong what they are allowed to get away with. It is not non-profit at all. If it were, why are there now hundreds of organizations doing it? Just follow the money trail people.

You know what, I think I'm going to write a book on the Evils of Non-Profit Credit Counseling. By it's own admission CCCS says that 50% of their clients file for bankruptcy within 6 months after starting a program and only 50% of those left every complete a program. That is a 75% failure rate. If I ran my business like that and had that kind of track record, would you do business with me?

Almost half of the customers in my office were deeper in debt after 6 months than when they started. Maybe that's why they file for bankruptcy.

I get more and more upset about this every time I think about it. Someones got to do something. In the 90's a very well known radio talk host and consumerist was gathering information about the industry to do a report then he just quit. I don't know about you, but it makes me wonder.

That's a good post, and it's 100 percent true from what I've seen. The reality is that credit counseling is the worst thing that can show up on a person's credit report -- far worse than bankruptcy. Creditors know that many if not most people who seek credit counseling are going to file bankruptcy soon anyhow, which makes it essentially impossible for a person in credit counseling to get credit.

Someone who recently filed bankruptcy, on the other hand, is a much better risk. This person has few bills, because most have been discharged, and they can't go bankrupt again for six years, so the creditor stands a much better chance of getting paid.

It will be interesting to see how the new bankruptcy law affects this picture.

The original poster asked about debt consolidation to restructure this girl's debts. That doesn't require a credit counseling service. A consumer loan that is used to pay off all other debts and have one monthly payment can be a way restructuring debt as well.

It may be that the situation was at a point where such a loan wouldn't be given due to a poor payment history, etc. But consolidation and restructuring don't always require either crediting counseling or bankruptsy.

The phrase "debt consolidation company" is a little unclear, and the post itself refers to a company (GreenPath) that's providing credit counseling, so I think she was referring to credit counseling more than simple debt consolidation.

Of course you're right, if a person's finances are not too far gone, it might be possible to roll all the debts into a single loan that provides a more manageable payment, and all you need is a lender who's willing to make that loan, not any sort of counseling.

Chapter 13 Bankruptcy might be the way to go. The person's emplorer writes a check each month for the courts, (this is deducted from the paycheck) and the courts distribute money to the creditors until the bills are paid. Secured debts (car, furniture, etc.) are paid off first before the unsecured (misc. credit card debt) are paid. The creditors must accept this way of payment. It's easier and cheaper than debt consolidation and a whole lot safer.

GreenPath is a Credit and Debt Counseling Organization and operates under the same terms I described above. There is a big difference between debt consolidation with a Credit Counselor and a Debt Consolidation Loan.

Anyone who is looking to consolidate their payments as a means to reduce their debt is kidding themselves. It MAY reduce your payments (for now) but it will not in any way reduce your debt. In fact, it will make your debt even larger and take much longer to pay off. The bottom line here is... YOU CAN'T BORROW YOUR WAY OUT OF DEBT!

If you find yourself in this position then a Chapter 13 Bankruptcy (Reorganization) may be your best bet. It will include ALL your debts, secured and unsecured, into just one (usually) much smaller monthly payment for 36 to 60 months. Again, bankruptcy is easier to recover from than a credit counselor.

What you should really be looking at is how you spend your money. Don't use a Budget, they're like Diets, they don't work. What you need is a good Spending Plan. A Spending Plan is not offered by any Credit Counselors I know of. Of course they will tell you different. If that is so then why do 75% of their clients fail?

My Grandmother practiced the old Envelope Theory of Bill Paying and Money Management. What I did was digitized it for my own use. I'm not talking using MS-Money or Quicken. Those are Budgeting programs or After The Fact accounting systems. I created digital envelopes on a spreadsheet that even my kids can use. I divided it up into Alphanumonic Categories or Envelopes...

A is for Auto / Transportation
B is for Babysitting / Child Care
C is for Contributions / Charity
D is for Dining Out / Fast Food
E is for Education
F is for Food and Household Items
G is also for Grooming
H is for Housing
I is for Insurance
I is also for Income
J is for Just for Fun
K is for Kids
L is for Leisure
M is for Medical / Dental
N is for Not Planned For
O is for Other / Misc
P is for Payments (all debts)
Q is for Gifts / Holidays / B-Days etc.
R is for Record Keeping / Postage
S is for Savings / Investments
T is for Taxes
U is for Utilities
V is for Vices
W is for Wardrobe
X is for Business Expenses
Y is a Question I ask myself. The answer is Because it works.
Z is for the sleep I get when Im on track and living comfortably within my means.

Each "Category" has several sub-categories and each one has a monthly amount to spend. If I don't spend it all the remainder goes to my savings. Only a few categories will have money that forwards to the next months Spending Plan. I call this, Saving My Savings. What I found is that after just 90 to 120 days I had 10% to 20% of my Income left over at the end of the month, after ALL the bills were paid, to do anything I wanted with. I even found that by applying a Domino or Roll-up system to my P for Payments envelope, I could retire ALL my debt in approximately one-third the normal time period without ever having to change my payments, add more money to my payments or having to borrow to consolidate. My $185,000 in debts that would have taken me 26 more years to pay off will be completely gone in less than 7 years for not a dime more than I'm paying right now.

Emergencies aren't a problem either because one of my envelopes is Savings. Within just a few months I had over $2500 in my Emergency Fund at the Credit Union. Everything over that goes to my Self Directed Roth IRA to grow Tax Free. When I started this my wife and I only made a combined income of less than $40,000 per year and we have 6 kids to boot.

Anyone can do it, it just takes discipline.

Oh. Yes, I have been asked many times if I would right a book about my system. The answer is yes, and Ive been working on it for about 15 years now. At this pace it should be done in about 10 more years. LOL You see Im really good about Spending my time doing other things like reading all your posts on Garden Web.

Good Luck,
Scotty

also take note-- collection companys-if it goes that far- do not have to accept an offer from a consolidation company. If you have alot of debts and can only give out lets say 300 extra a month then everyone you owe gets very little and will not accept that.

If one has a measure of diplomacy about them and can avoid getting angry rather easily, usually one can negotiate one's way to reduction of costs with various lenders.

But when one agrees to carry out certain payment schedules as a result of such negotiations, one must fulfill one's promises.

If one casn't carry out such a project on one's own, a friend who's had some experioence in the world and dealing with people may be able to help work out as plan with the various creditors.

A number of debt consolidation companies charge a substantial fee. In some casaes this is paid by the lenders, who sometimes deduct that fee from the amount that they credit to balances which the crditor owes, so the debt is reduced by much less than the borrower understands.

Some potential credit granting agencies take a very dim view of debt consolidation and some credit evaluation companies are said to view it almost as bad as a bankruptcy, I've heard in some money-management discussions. Though why they should view it so is beyond me, for in bankruptcy the creditors usually get little and the borrower walks away.

The person seeking to work out an arrangment is trying to fulfill the obligations which s/he took on, not avoid paying them.

Good wishes as you seek to work this unpalateable situation out.

joyful guy

If you belong to a credit union, see if they have credit counseling services.

Often free of charge, and VERY useful for many people.

Uncle Scotty, I love that list and I'm adapting it for my own use.