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Beware of Easy Debt Solutions
Fort Collins Coloradoan
August 10, 2002
Columns

Consumer debt is on the rise, with the average American family now owing $8,000 on their credit cards. On top of this, the economy has been pretty unpredictable, with job losses and cutbacks prompting people to rethink how they handle their money.

Yet our local Consumer Credit Counseling Service (CCCS) hasn’t noticed an increase in calls during these troubled times. Why?

Executive Director of the CCCS, Sara Allen, believes one of the main reasons may be consumer susceptibility to advertisements by an explosion of agencies offering quick fixes and impossible promises.

"Late night TV, Internet ads, 1-800 numbers for debt relief offer a simple solution and people are tempted to go that way," she says. "Then those people come here after losing $1000, even $3000 in fees."

During the 1980’s, credit counseling was a small industry of about 200 nonprofit agencies. Today, following the huge growth in bankruptcies and consumer credit, there are more than 1000 credit and debt counseling organizations, many of which use remote telephone operations. But working out who is reputable can be tricky.

"It’s a problem," says Ms Allen. The Better Business Bureau has been flooded with complaints about extortionate ‘administrative costs’ taken up front. Some agencies don’t pay creditors as promised, leaving the consumer with more debt, more late fees, more phone calls and letters from creditors chasing payments.

"It troubles me to hear how much money people are spending before they learn that ‘easy’ isn’t really easy," she says. "These invitations can seem like the point-and-click solution to a person’s debt. But those companies need to be regarded with a healthy dose of skepticism."

United Way supports the Consumer Credit Counseling Service for a number of reasons. It’s an established, local organization that offers face-to-face counseling. It is accredited nationally and its counselors are also nationally certified. Outcome measurements show that it’s been successful in helping over 90% of its clients through free or affordable financial counseling, debt management and educational workshops.

"We’re proud of our United Way connection," says Ms Allen. "United Way goes to great lengths to research agencies and their programs. We, in turn, go to great lengths to achieve excellent standards."

The CCCS aims primarily to give people choices. "We’re the trusted, confidential, local connection for people to get financial advice about planning budgets, getting their debts paid and learning money management skills," Ms Allen says.

Whichever credit counseling agency a consumer chooses, it’s critical to thoroughly check it out first. The following are important questions to ask:
- Have complaints been filed at the Better Business Bureau?
- What are their fees?
- Will they help you plan to avoid future financial problems?
- What are their counselors’ qualifications?
- Who regulates the agency, and is it audited?
- How often will they send out your funds to your accounts?

Overall, perhaps the best advice is, if it looks too good to be true, it probably is. Consumers beware!

You can contact the CCCS at phone (970) 229-0695, or at one of its two offices at 1247 Riverside Avenue in Fort Collins, and 315 East 7th Avenue in Loveland.

-By Meg Brown a.k.a.: Sophie Waghorn

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