According to recent statistics, nearly 100,000 Americans sought advice from a credit counseling agency in June 2009. That figure represents an increase of over a third from the same period a year earlier, underscoring the financial pressure faced by citizens across the country. Many Americans find themselves searching for answers in the wake of sudden job losses, illnesses, or family emergencies that can stunt household income.
Doctors, lawyers, and other professionals often find themselves managing business-related credit card balances. Business professionals endure higher risks, since their clients and customers may fail to make payments on outstanding invoices. Jim Young started Associated Debt Consolidation to assist this highly specialized group of consumers, many of whom face financial challenges despite remaining current on all of their credit card payments.
Credit Counseling and Credit Scores
Financial experts often caution consumers about how credit counseling affects your credit score. Programs that encourage participants to miss some credit card payments can damage scores simply by causing multiple late payments to appear on credit reports. In a recent interview with author Michael Killian, Young emphasized that professionals in the midst of temporary hardship can participate in strategic debt management solutions that minimize long term negative impact to credit reports.
"Debt management does not ruin your credit and is by design a means of preserving your credit," Young said. "Some creditors will report Credit Counseling or DMP on a client's credit report. That entry on the report will only remain there until the client is finished with the program. The entry itself is put there to prevent clients from obtaining additional revolving accounts while they are enrolled in the program. The entry itself does not drop the credit score."
How For-Profit Credit Counseling Is Different for Business Professionals
Participants in programs developed by Accelerated Debt Consolidation take a strategic approach to minimizing and managing business debt:
- First, Young and his team research which of a client's credit card accounts should remain open, so the client can continue to rent cars, book hotels, and facilitate vital trade lines. Young's experience has helped identify specific creditors with whom accounts must remain open in order for clients to qualify for mortgages or small business loans. A less experienced credit counseling agency might inadvertently close these trade lines.
- Next, a client proactively closes accounts intended for inclusion in the debt management program. This requires credit bureaus to report those accounts as "closed by consumer". Please note that closing accounts that are current (i.e. not delinquent) can hurt your credit score in many cases.
- Then, the Accelerated Debt Consolidation team manages the process of submitting debt management proposals through a carefully cultivated network of contacts.
By closing accounts, program participants reduce risk for lenders. Many lenders reciprocate by lowering interest rates and reducing monthly minimum payments, easing cash flow for business professionals. With a decade-long track record of helping professionals restructure unsecured debt, Young and his team have set a high standard of ethics and effectiveness among for-profit credit counseling firms. Interestingly enough, given the growing distrust and scrutiny of non-profit agencies, Accelerated is a breath of fresh air for its clients.