Borrowers Advised to Not "Settle" for Less
CCCS-SF Urges People to Know Rights, Use Established Nonprofits for Help

May 5, 2004 – As accusations of fraud against National Consumer Council, a California-based credit repair company fly, Consumer Credit Counseling Service of San Francisco (CCCS-SF) urges people with debt problems to only contact agencies that are education-based, and that have a long and proven track record of helping the community gain financial control. There, people can get straightforward money management counseling so they can learn their rights, responsibilities, and options, as well as identify and cure the root issues of debt.

Unscrupulous companies enroll people in debt-negotiating programs to arrange settlements while charging high, hidden fees. According to the Federal Trade Commission, National Consumer Council failed to tell consumers that they did not begin negotiating debts for six months or longer, and that in the mean time should continue to pay their bills. Because of this, many people ended up filing for bankruptcy when, had they received the right assistance, may not have had to.

"After 35 years helping people with personal finance issues, we've seen and heard thousands of horror stories. It is always tragic when someone who is really seeking help ends up worse off then they were," said Joanne Budde, President of CCCS-SF. "Our counselors clean up a lot of messes that disreputable companies leave behind."

So what can a consumer do when faced with bills that they just can't pay? CCCS-SF offers a plan of action:

  • Contact creditors before missing a payment: special programs may be available
  • Be honest: explain what happened, even if you were "irresponsible"
  • Stay calm: getting overly emotional can cause you to say something you later regret
  • Make conservative promises: not meeting your self-imposed guarantees will only make the situation worse.
  • Be specific: offer lesser, no, or interest only payments, reduced fees, or ask to settle for less than what's owed
  • Correspond by mail: you'll have proof of contact and can communicate without getting flustered
  • Don't send post-dated checks: they can be cashed anytime, and your situation will deteriorate if they bounce
  • Know what can happen if you can't pay: repossessions for secured debt, lawsuits for unsecured debts
  • Know your rights: collection agencies must comply with the Fair Debt Collection Practices Act, while other creditors must comply with state law
  • Maintain contact: even if you don't hear from your creditors, continue to provide updates of your situation.

"There are so many legitimate and effective ways to deal with debt. But because there are so many companies willing to bilk consumers, people don't know who to turn to for reputable assistance," said Budde. "We advise all Americans to know their rights, learn as much as possible about money management and credit, and research a company thoroughly before forming any kind of business arrangement."

Copyright © 2005 CCCS of San Francisco
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