Consumer Credit Counseling Agencies

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Post subject: Consumer Credit Counseling agencies

Dana Day
Date: 1/13/2001 10:16 am CDT

My husband's employer (a hospital) went out of business. The income loss has been devastating. Replacing the income will be slow. There is a lot of unemployment in this geographic area. We contacted a credit counselling agency. We don't have enough income to even qualify for their program. My question is : Do credit card companies PAY such agencies to work out payment plans for their cusomers, AND, do credit card companies do the same sort of payment negotiating directly with their customers without the middle-man? Also, are there any lenders who will take all of your debt and work out payments with you without requiring a second mortgage or other collateral?

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Linda in VA
Date: 1/13/2001 6:48 pm CDT

Dana,

Any chance you and your hubby took the payment protection plan offered by your card companies? If you did, you would most likely be covered for this unfortunate situation. Most of them cover involuntary unemployment. If you're not sure call and ask them.

And the rest of you who think it's a waste of your good money, pay attention. It can happen to anyone.

Linda in VA - the insurance agent

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Dana Day
Date: 1/15/2001 9:21 am CDT

Linda.
Yes, but it was a waste of money. He had to be unemployed for at least three months. Then we had to PROVE the unemployement and that he was looking for a job, with copies of letters from the an unemployment bureau. Well, my husband started working for a new outfit that has a cash flow problem, so pay is often delayed for up to 4 months. State unemployement insurance said he's still working even if he does not get paid, so they cut off checks. Since the unemployment checks cut off, the bureau that helps you hunt for a job would also not send any job prospects and would not send letters saying he was looking for a job, so the credit insurance would not pay the credit card payments. Also, credit insurance had a limit that they only pay for six months anyway. And, at his new job, he has to build up his own clientelle, so what money we do get is one fourth of his previous income at this stage. So a new job at a lower income is not covered by credit insurance. And, any cards in my name, not his, are not covered. All in all, I have to say the credit insurance was a major rip off. -Dana

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Linda in VA
Date: 1/15/2001 11:08 am CDT

Oh jeepers!! what a mess. I think the rip off is the folks who won't pay him, and the state agency that says he is employed when he is not getting paid.

As far as only paying for 6 months - that is better than nothing, but I doubt I would take it unless the cost was commensurate with the length of the benefit period.

Do you have a copy of the insurance contract? You can email me, I will see if there's anything I can get done for you. Include your state of residence if you email me. I have made a lot of companies pay, when they had said they wouldn't. I've been an agent a long time, am licensed in every state, and I "know the ropes".

Regards,
Linda in VA

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Board Monitor - CA
Date: 1/15/2001 3:20 pm CDT

Dana,

Thanks for your post! To answer to your original question...yes you can negotiate with creditors directly and this does sometimes work (search the board for tips on this subject), however counseling agencies have much more bargaining power than you do as an individual consumer. They have existing relationships with card issuers. While counseling agencies don't charge issuers for their services, they do get paid through "voluntary donations" from the issuers. These "voluntary donations" are the way that counseling agencies are able to obtain non-profit status. The donations apparently add up to a lost of cash because it seems like every day I see a new ad on tv for counseling agencies (I'm assuming the t.v. stations aren't giving free advertising time).

Would be interested in any other feedback on this subject.

Best Regards,
Curtis Arnold
CFCCT P.R. Director
http://www.cardratings.org

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Mr. Clams
Date: 1/16/2001 1:17 pm CDT

According to your post:
"The income loss has been devastating. Replacing the income will be slow. There is a lot of unemployment in this geographic area. We contacted a credit counselling agency. We don't have enough income to even qualify for their program. "

What happened to you has happened to many people before. There is a solution and it is called Bankruptcy. It isn't as bad as some people make it out to be.

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