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.
- "I don't know
the total amount of my debts and obligations"
- "It is very difficult
for me to save any money at all."
- "It seems to
be a paycheck to paycheck life-style."
- "There have been
occasions when I have paid late charges on a loan."
- "I have paid
only the minimum on revolving charge accounts."
- "I have used
(or plan to use) a consolidation loan to pay my bills."
- "I have argued
with a spouse over finances."
- "An increased
percentage of my income is being used to pay my bills."
- "I have approached
or about to reach my credit limits."
- "I have received
calls from a collection agency at both work and home.
- "I have been
threatened with repossession of my car or credit cards."
- "I have put off
medical or dental visits for financial reasons."
- "I have reached
a point where I would be in immediate financial difficulty should
I have an interruption in or suspension of my income."
- "I am not properly
insured with my motor vehicle because of financial troubles."
- "I am behind
on my child support other court ordered payments."
- "I am afraid
to add up my debts."
- "I have had a
financial institution close my checking account because of too
many non-sufficient funds checks were presented."
- "I have lost
check writing privileges at some merchants I shop with, because
of non-sufficient funds checks."
- "I am unable
to obtain needed credit due to my credit report."
- "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: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) 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: www.financial-education-icfe.org and studentdebthelp.org. 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.