Update Sunday, January 19, 2003: http://www.bendover.com/kfiquestion.asp?faq=10&fldAuto=556&chapter_fldAuto=61 Didja hear about the 74 year old woman who enlisted the help of CCCS? They shrewdly negotiated a payout on her two credit cards that will take 80 years to complete! (At an APR of +/- 53%!!!) Plus: Who's really paying CCCS, anyway? Have you ever wondered how the folks at Consumer Credit Counseling Service are paid? What sort of success rate do they have for their debt-laden clients? They are without a doubt, the best known non-profit debt counseling service on the planet! And with the economy the way it is, combined with the unbridled greed of the credit card and banking industries, the debt counseling business (overall) is huge...but CCCS is facing some stiff competition...lots of upstart debt counseling companies-non-profit or not-are pressuring the "voluntary" commissions paid to CCCS and others in the business. CCCS-Los Angeles president Peter Lake answered some tough questions on the air and within a few minutes...figured out that someone on his CCCS team dropped the ball and didn't do their homework. If they'd spent 30 seconds on this website and searched for previous Dover-authored articles about CCCS, Mr. Lake would have never come on the show. Here's a little taste of what you missed..... Why does CCCS pound the fact that they're a non-profit organization? Dover's Reality: Because the vast majority of consumers don't have a clue about what non-profit really means. Bottom line? Non-profits do make money...they just distribute what would normally be returned to shareholders as dividends and pay it out to employees or officers as bonuses. They make money, kids...they're not charities-they're spin-masters that play on your lack of savvy. How is CCCS paid? If you wanna read their spin and side-stepping explanation, read the answer they've posted on their website here. Dover's Reality? These "voluntary contributions" that CCCS receives are also known as commissions. The fee received by CCCS amounts to a commission for collection services-which in my book makes them a debt collector. Let's see...they're being paid by your creditors to "work out" a repayment plan that's supposedly in your best interest. You believe that? You're a fool if you do! I promise you their loyalties lie with the people paying them...not with the beaten-down-and-buried-in-debt consumer who naively seeks their counsel. "Our average DMP [Debt Management Plan] can take up to 40 months..." said Mr. Lake. Really? Not according to one DMP I have in my hands. The [former] client of CCCS-Los Angeles is now filing for bankruptcy...something she should have done a year ago, instead of trusting CCCS. Here's the scoop: She's a 74 year old senior citizen and owns nothing. She rents an apartment, works part- time to make extra cash to pay bills and takes home a net of $740 a month, plus whatever meager Social Security benefits she's eligible to receive. She signed up with CCCS-LA a year ago and has never missed her $229 a month payment; she enlisted their help to repay two credit cards: $2,404 to Capitol One and $6,666 to Providian. In one year she has paid $1,008 on the Capitol One credit card...and the original balance has been reduced to $2,057...out of $1,008 in payments the balance has gone down only $347. You'll love the wonderful progress they've made on the Providian card: She's made $2,005 worth of payments and her balance has gone UP from its original $6,666 to $6,929! She now owes $263 more than when she signed up with CCCS-Los Angeles!!! To recap: This woman is 74 years old and at the current amortization rate, she'll be finished paying off these two credit cards when she's the ripe old age of 154 years old. That's right: Instead of the 40 month DMP touted by Peter Lake, this poor woman's current payout plan will take 80 years. She's paying an estimated 53% APR...out of $229 only $9.33 is going to principal and the rest to interest and "fees." Refresh my memory one more time: She signed up with CCCS to pay off her debts and after they did a personal evaluation, this was the best they could come up with? What ever happened to the CCCS nationwide promise of negotiating with creditors and using the stellar reputation and leverage of CCCS to get creditors to reduce or waive finance charges? You first need to read their spin on this huge part of their sales pitch as posted on their website. [Go read it now!!!] http://www.cccsla.org/about/faq19.html Frequently Asked Questions 19. Will CCCS stop the interest being charged on all accounts? The majority of creditors will reduce or waive finance charges for clients on our Debt Management Plan. However, some creditors will not make any adjustments to their monthly finance charges. Upon request, the counselor can advise clients which of their creditors will reduce interest or waive late fees. As CCCS does not set creditor policy, it is subject to change at the creditor's discretion. Okay...you tell me: Does it look like CCCS is delivering on their promise in this horrible example I just laid out for you? CCCS-Bottom Line: Should you repay your debts? Absolutely...but remember that the bankruptcy laws are there for a reason. I don't care how or why someone's gotten themselves into financial trouble-that's not the issue right now. Getting people on the right track is what's important...if re-negotiated repayment plans are the answer, then do it! But it's becoming increasingly obvious that more consumers should take a serious look at pulling the ripcord by invoking their rights under federal [and state] bankruptcy laws. This woman's example should serve as a confirmation of what I've been preaching: If the creditors won't play ball and renegotiate the repayment schedule, then tough luck. See ya in court. Don't drill me about encouraging consumers to be irresponsible: It takes two to make a credit transaction; why do these credit card companies continue to extend unsecured credit to consumers that obviously can't handle this type of debt? Greed. Pure and simple. If they don't issue the credit cards, the people can't run 'em up. The "sword of responsibility" cuts both ways, kids. Butch's Question: Now do you see why OC's and CA's try to FORCE you to go to CCCS?
The other unfortunate reality of CCCS is that having the "consumer Credit Counseling" mark on your credit report is viewed by some lenders as being equal to bankruptcy. Others view it as a warning that you are a BK waiting to happen. Also, plan on being 30+ days late perpetually. You get the joy of paying much more than you truly owe, and still having a bad report. CCCS may be a workable alternative for some situations, but it is important to know ALL the ramifications before the decision is made. Radi8
I am paying a CA through CCCS right now, how do I find out at what rate they are charging interest? I receive no statements from the CA like I do my regular CC accounts. If CA is not reporting on my CR what should my approach to them be at this point? Validation? take them off CCCS and pay on my own. Any help is certainly appreciated.
As a rebuttal.... I was Counselor and a Manager with CCCS-NYC many years ago. Now, the laws may have changed since then with regards to debt poolers and non-profit status, but there were terrible scandals out of Rhode island with for-profit debt poolers taking debtors' money and not paying the bills, so most states passed laws requiring debt poolers (which is what CCCS and its competitors are) to be non-profit. I have been out of that industry for over 20 years, so I have no allegiance to it, and what my memories of it are may no longer be the total reality, but I doubt I am really far off base. The original post states that the "profits" of the non-profit CCCS is paid to the employees and officers/directors. I have been involved in non-profits most of my adult life and with very rare exceptions, that just is not true. The vast majority of non-profits (including the CCCS I worked for) paid NO bonuses to either officers, Directors or employees. We got our salaries (I took a cut in pay when CCCS recruited me from an Auto Finance Company) and that was it. The CCCS I worked for was put out of business in large part by the politics of the City of New York. It helps a non-profit not at all when the NYC Commissioner of Consumer Affairs (a very powerful position in New York City) is a political opponent of one of CCCS' Directors in a political race. The CCCS became a campaign issue, and the Commissioner used the power of his office to impose (retroactively) performance standards on CCCS that the same Department of Consumer Affiars refused to help formulate six years earlier when CCCS voluntarily requested them to do so. The creditor contribution, which the poster refers to as a collection agency commission, can be looked at two ways. YES, it is performance related, but NO, it is not mandatory, and no creditor recieves preferential treatment because they contribute. Creditor cooperation comes and goes as the economy expands or contracts. When I began with CCCS, Sears was one of its principal supporters, both financially and in letting the collectors know to cooperate with CCCS. By the time I left Sears had withdrawn both types of support for CCCS and was, at that time, one of our biggest creditor headaches. CCCS has to, by definition, walk a tight line when it gives debtors advice. We caught a lot of hell from the creditors for mentioning Bankruptcy as an option too often, and just as much hell from the Department of Consumer Affairs for not mentioning it enough. As a counselor and as a manager I can tell you it was our policy not to take on any Debt Management case that could not be fully resolved in 6 years or less. Finally, if CCCS is a CA's best friend then why are CA's notorious for not accepting CCCS plans? I suggest the original poster may have an axe to grind but is not honest enough to come out and say it. Guilt by accusation only works in the star Chamber.
You should still be entitled to a full statement of account. What all too often happens is that CCCS, will be late at getting pmts. to the CC. In these cases the CC may be charging late pmt. fees, $25.00 - $29.95. If the pmt. schedule is slotted "off due date", (resulting in a perpetual late pay) you may have a new late charge every month. Also, they *should* have reduced your interest rate as a result of agreeing to a pmt. plan through CCCS. It's CCCS's job to negotiate a reduced rate, and hopefully an adjustment in the reporting when the acct. is paid. You should have some paperwork from CCCS, outlining the conditions of pmt. etc. Once you study that call your CCCS rep. and start asking questions. If things are working out for you Irisheyes, and you've been in the plan for awhile, AND you got a deal from the CC co., I wouldn't change it at this point. Come back and let us know what you find out, OK?
Thanks for your help Butch. I emailed Myvesta (my CC) and asked for the info on the CA agreement with them, including interest rate and date of payoff. All my other accts send me statements every month so I can monitor payments applied etc. And when I joined, each creditor sent a letter explaining my terms under CCCS. I have gotten nothing from CA since adding them to CCC. Boy I wish I found this site at least 6 mths ago, if not about 2 years ago!
Buch--- Your long post is interesting but irrelevant. Yes, the organization you cite located in Maryland because that state allows for-profit Debt Poolers. You mention two states - Rhode island, where the original scandals in the 1960's and 1970's came from originally is the other one. But read the first sentence - it is a "for-profit". Your post backs up nothing you have said about the many licensed non-profit debt poolers. In the other 48 states, the non-profits work ina deep pool of tight regulation. If the problems you cite were a national problem, they would be emanating from more than two states. As far as the CCCS I worked for being shut down by the politicians, when did I ever say Politicians are out for the public good? They are out for their own pockets and images and don't care who gets trampled in the process.
I read your email, and still unclear. Are credit counselors good or bad? I have about 15k in just credit card debts and I am currently using CCCS, but I want to make sure this is the right move. I have received my cc statements, and the rates are reduced, from when I waws paying the credit cards myself. Please respond, this is a major issue for me.
