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"Do You Need a Credit Counselor or a Debt Negotiator?"

RELEASE: July 2002
CONTACT: Paul S. Richard, ICFE Executive Director

San Diego, CA. The growing number of credit and debt counselors, both non-for-profit and for profit groups, encouraging consumers to use their services, in a variety of medias and formats, is an alarming indicator of the great amount of short term debt Americans have accumulated.

Indebted consumers are having to choose between competing groups of counselors offering a variety of counseling options from a face-to-face encounter, or telephone and internet counseling services. Now they must decide whether or not they should use an accredited, nonprofit consumer credit counselor or a debt negotiator.

The more established consumer credit counselors, funded in part by the creditors, encourage consumers to make every effort to pay their debts. With the help of a certified counselor, who seeks reductions in interest charges and payments as part of an overall plan to pay off the debt, consumers avoid bankruptcy and certain ruin of one's credit standing for the next ten years.

Debt negotiators, on the other hand, promote their services to reduce, sometimes by up to 70 percent, a consumer's debts and pay them off. The latter approach, while avoiding bankruptcy, will leave many charge-off's on one's credit file, which, to other creditors, and future potential lenders, looks just as bad as a bankruptcy.

Also, in order to take advantage of debt negotiation, consumers must have the cash on hand to pay off the reduced debt and pay the hefty fees for the negotiation services. Debt amounts written off may also cause problems for consumers with the Internal Revenue Service, because the amount of debt that is forgiven may be viewed as income to the borrower.

The following 20 signs indicate that you might need the help of a certified credit counselor and not a debt-negotiator.

  1. "I don't know the total amount of my debts and obligations"
  2. "It is very difficult for me to save any money at all."
  3. "It seems to be a paycheck to paycheck life-style."
  4. "There have been occasions when I have paid late charges on a loan."
  5. "I have paid only the minimum on revolving charge accounts."
  6. "I have used (or plan to use) a consolidation loan to pay my bills."
  7. "I have argued with a spouse over finances."
  8. "An increased percentage of my income is being used to pay my bills."
  9. "I have approached or about to reach my credit limits."
  10. "I have received calls from a collection agency at both work and home.
  11. "I have been threatened with repossession of my car or credit cards."
  12. "I have put off medical or dental visits for financial reasons."
  13. "I have reached a point where I would be in immediate financial difficulty should I have an interruption in or suspension of my income."
  14. "I am not properly insured with my motor vehicle because of financial troubles."
  15. "I am behind on my child support other court ordered payments."
  16. "I am afraid to add up my debts."
  17. "I have had a financial institution close my checking account because of too many non-sufficient funds checks were presented."
  18. "I have lost check writing privileges at some merchants I shop with, because of non-sufficient funds checks."
  19. "I am unable to obtain needed credit due to my credit report."
  20. "I have been turned down for an apartment or home mortgage based on my finances."

If you have answered "yes" for any of these twenty statements, you may need to visit with a certified credit counselor with a bona fide, nonprofit, accredited, consumer credit counseling service.

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the ( web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much.  ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: and  Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G,  a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.

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San Diego, Ca 92163
Paul S. Richard, Executive Director
Phone 619-239-1401

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