Credit Basics
Credit Counseling Confusion: Consumers need to sift bad advice from good
BY EILEEN ALT POWELL
ASSOCIATED PRESS
Dec 8, 2003
The reputation of the credit counseling industry was badly battered in recent months.
First, the National Consumer Law Center and the Consumer Federation of America issued a
report accusing some counseling agencies of "improper advice, deceptive practices,
excessive fees and abuse of their nonprofit status."
Then the Internal Revenue Service, Federal Trade Commission and state regulators
issued a consumer alert about credit counselors, and the IRS said it would look
into pulling the tax-exempt status of agencies that charged too much and provided
little or no counseling.
Last month, the FTC sued AmeriDebt,alleging it used deceptive marketing to bilk
consumers.
As a result of the criticism, some consumers who need help might hesitate to seek
it.
"People are becoming skeptical and afraid," said David C. Jones, president of the
Association of Independent Consumer Credit Counseling Agencies, based in Richmond,
Va. "They hear so many different things, they don't know what to do."
He added: "In a way it's a good thing, because people will know to be more careful,
to look around and be sure they're dealing with responsible agencies."
Kayla Fenner, 36, sought help about three years ago from the Consumer
Credit Counseling Service in Shreveport, La.
"I had been swimming in debt since I got my first credit card in college at the
age of 19," Fenner said. "I realized that, even though I made a good salary, I was
living hand to mouth."
Consumer Credit Counseling Service counselors helped her work out a budget and a payment schedule, and Fenner, a registered
nurse, has so far paid off all but $8,000 of her $37,000 debt.
The counselors "made me cut up all my credit cards, and I had to learn how
to live without
credit," said Fenner, married and the mother of two children. "But
I did it, and it's the best thing I've ever done. They gave me a new lease on life."
