INTERESTED IN BUYING A HOME? Fact is, you may not be able to play today if you didn't pay yesterday!

Good and timely information.  It seems that more and more of our clients are looking for "credit repair" for recent problems with their credit.  I agree that with time and discipline they will be able to get out of debt.  Thanks for the post!

Lenn,

That was absolutely great advice and very well-written.

Far too many consumers keep spending whenm they are in financial difficulty. Spending will not help, nor will many credit repair companies. Your advice to stay out of the mall, will work.

Brian

Great advice Lenn on how people can help themselves. I'm not a big fan of the CCC's as I've heard a few examples of them making situations worse by the lowered payments.

Lenn,

As always, thanks so much for the useful post.

I'm re-blogging it for my clients on my outside blog.

Lenn,  in over 18 months you are the first person who has ever offered up a benefit of CCC companies over other programs..  I have spent the last year and a half educating myself on the topic.  While not an expert I offer an extremely educated perspective.  I have asked CEO's, Marketers, Sales Agents, industry advocates - not one of them has ever given an answer on how CCC benefits consumers over other debt relief programs.

Here is my issues with this post: 

1.  Your statement that CCC is the ONLY way to go. It's only one way to go.

2.  This comment back to me raises the hair on the back of my neck. - I mean no disprespect but this statement is 100% inaccurate information.  "Is their success percentage 20%.  I would suspect that is about right, but I believe that's a significant success percentage when considering what they do.  Besides, it isn't CCC that fails.  It's the consumer who fails, which reflects a pattern of poor credit habits."

By making this statment you put forth a stigma that it's the clients who fail when it fact there is a structural problem with the credit counseling program from the onset.  A 20% success rate strongly supports this contention.

In most cases, CCC only lowers interest rates but it does not lower the monthly payment that the consumer is required to make.  From the onset the payment is too high.   When a consumer goes to any debt relief program they are looking for cash flow relief, not just debt relief.    Creditor practices are the primary reason for client failure.  Most clients who drop out of the program state that the failure of creditors to work with them by lowering interest rates and payments are the reason for the drop out.  Most who drop out are forced into Bankruptcy.

According to studies by multiple consumer groups and paticularally the consumerfed.org the key problems with CCC are deceptive and misleading practices, excessive costs and abuse of non-profit status.

I'm not saying that CCC doesn't have it's place.  It's just not the only path, 80% of the time it's the wrong path.

Every time this blog post has been reblogged with it's current language a consumer has the potenital to be hurt.  Lenn you are a powerful voice here in AR.  Sometimes I agree with you, sometimes I don't.  I am one little voice swimming upstream against an industry with a powerful media and public relations budget.

It is however an educated voice, one that talks to 10 to 15 clients a day who are in financial hardship.  Just because CCC has worked for a few clients does not make it  the only way to go!

Lenn: I just love it ~ stay out of the mall ~ stay away from the credit cards. Great Post! So many folks do not understand that doing a short sale affects their credit ~ and some agents don't understand it either.

Lenn I understand your point of view and perspective, but  I disagree.  The numbers don't support it.

only 35% of chapter 13 Bk's are actually completed.  The public record stigma and permanance of a BK make it a poor option for most.

20% of CCCs programs are actually completed.

70% of clients who enroll with reputable debt settlment companies complete the programs

As for the Attorney General - 2 years ago I might have agreed with you. Today my gut tells me that the Attorney General is an elected position and as such is suspect when it comes to making recommendations regarding anything having to do with the banking industry.

The banking lobbies are too strong and the tenacles too wide reaching. 

We can't have it both ways.  We believe that the government is clueless when it comes to legislation on our business but somehow it does the right things when it comes to making recommendations for consumers. History tells a different story. 

Banks have a vested interest in muddying the waters when it comes to credit repair and debt relief.  There is a huge amount of misinformation propogated by the financial sector and it's wrapped in warm and fuzzy not for profit and recommendations by the "government".

 Are there bad companies in this industry?  Absolutely?  Are there bad people in this industry?  Of course.

There were bad people and companies in both the mortgage sector and real estate sector.  That doesn't mean that mortgages were bad.

Comsumers need choice and they need access to reliable, accurate  information so that theycan  make the right choices.  INHO, the banking lobbiests are making this impossible by spreading misinformation and funding legislative campaigns to take away consumer choices.

Just read some excellent books by Dave Ramsey on budgeting and managing your money.  Lots and lots of ideas that make good sense AND require a lot of self control in an "I want it now" society.

It is so sad that basic budgeting and common sense became so unpopular these past years.  Like you, I remember when all of my buyers had 20% down and they paid their own closing costs.  As a matter of fact, one of my first deals in 1991 was with B of A who had to offer to pay closing costs as part of a discrimination lawsuit settlement.  My first-time buyers were thrilled!  I hope we all learn from this recession.

Lenn,

The stats are historical numbers based on eight years of data from our  back end companies and our own retention.   I do need to correct the percentage downward.  Historically our graduation rate has hoverd around 70%.  In todays economic  climate the graduation rate has decreased to about 50%.  Drop outs are usually due to loss of job, and reduced income.

To find reputable companies the consumer has two industry associations that they can refer to :  The Association of Settlement Companies (TASC) and United States Organizations of Bankruptcy Alternatives (USOBA)

Lenn, I am in no way arguing with your formula and I do understand that your perspective is focused on selling homes. It makes sense that you would suggest CCC.

When I entered this conversation it was to challenge the concept that CCC is always best for the consumer.  Based on the first hand knowlege that I have of talking to 10 -15 clients a day, if someone is buying a home after two years of entering a CCC program it's highly likely that they didn't belong in CCC to begin with.

In fact, it''s probable that Dave Ramseys program or other debt roll down, snowball effect programs would have been just as effective, less costly and more beneficial to the client.  I often point people in this direction.

It saddens me to read the judgmental tone of many of the comments on this post.  8 out of 10 of the people I talk to are in the situation because of job loss, or extreme medical conditions  that resulted in reduced income and increased expenses.

They find no help from creditors when they call to ask for relief.  Often they find interest rates increase after contacting creditors because they have now become "high risk".  Go Figure.   They are often left dangling from a rope until the rope breaks.    Debt settlement  offers an excellent alternative to a Chapter 13. 

If someone is in a true hardship, debt settlement will lower the DTI and get people out of debt and back  on strong financial footing and into the housing market faster than anything else.

I don't belive in one size fits all formulas.  Each client must be looked at as an individual with respect and compassion for their situation.  The goal is to get people back in the game and into a position where debt no longer controls them.

Great article! Thank You!

Lenn, there are some people who need to hear this about eighty times a day.  They just don't get the importance of keeping integrity in their finances.