I read that "non-profit" low-fee CCCS is funded by the major credit card companies. Is this true? Do they offer confidentiality or do we have to worry that anything we reveal might be shared with the CC companies? I went to them to get my combined credit report, but I didn't get debt counseling yet. Is their combined credit report as accurate as getting the 3 separate reports? Do any or all of the CRAs offer yearly online access to our reports so we can track improvements? (how much do they charge?) Thanks.
From what I understand about CCCS, they "WORK" with the credit card companies to stop the interest and make monthly payments that CCCS controls. Some companies REFUSE to work with CCCS. Also there are MANY stories where people have PAID IN FULL with CCCS and have NOT been able to get a 100% secured card 2 years POST CCCS... Not that BK is good...but people 2 years POST BK can get unsecured cards and a low rate mortgage...
I know by definition that CCCS "WORKS" with CC companies. But are they "FUNDED" by them as well, helping John and Jane Q Public pay their debts, and helping CC companies get paid as much as possible? Are they confidential? Or might they share private information with the CC companies (that may be funding them)?
They have to share information... If the credit card companies pay them (or CCCS pays the credit card companies), I don't know.
They can justify however they want, but from my experience they care more about the creditors getting paid than about the client's current or future financial security. Their least concern is your credit health- your credit is ruined by participation with CCCS. Period. Confidential? When you talk to them you fill out all kinds of forms and a budget/financial plan and I'm pretty sure they share this info with the creditors. You have to sign an agreement allowing them to share your personal (home and work addresses + addresses of another family member, etc.) and financial info (income, savings, indebtedness, budgetary constraints, creditor addresses, etc) with the creditors on your plan. Their reasoning for this is that they have to share this info in order to come to a reasonable payment plan. Whatever- its a crock. From a CCCS website: How is CCCS funded? The majority of our funding comes from grants, nominal client fees and voluntary contributions from creditors who participate in Debt Management Programs, or DMP's. Our DMP serves the dual role of helping you repay your debt and helping creditors to receive the money owed to them. Since creditors have a vested financial interest in getting paid, most are willing to make a contribution to help fund our agencies. These contributions are usually calculated as a percentage of payments you make through your DMP. Please be assured, however, your accounts with your creditors will always be credited with 100% of the amount you pay through us - and we'll work with all of your creditors, regardless of whether they contribute to our agency. A win-win situation.
If they pull a tri-merge credit report. It will show as "consumer credit counseling" or "debt management" under permissible purpose. So I would go to the cra and pull from their websites or anywhere else other than CCCS. Because it will show on your credit report, even if you don't go for the counseling. CCCS can be detrimental to your credit. Like George said, companies look at person with a BK more favorably than someone who has had CCCS.
The "tri-merge credit report" that CCCS offers comes from a company called Fidelity National Credit Services. That is the only name that appears under "Inquires in the Past 90 days". Are they "known" to be associated with CCCS or has anyone heard that they are independant? How much does a single report from each CRA cost on their websites (and what format do they provide it in, i.e. html, pdf or something else that I can save and/or print out) ? Do the CRA websites offer programs that let you pull reports from the web (for months or a year at a time) so I can keep track of changes to my CR? And finally from what I've been hearing/reading, it's very possible/apparent that CCCS may be a "wolf in sheep's clothing" which is more on the side of creditors than clients. Thanks, I will take the warning to avoid them!
Can't put my hands on it right now, but a couple of years ago, both "Kiplinger's Personal Financial Magazine" and "Smart Money" wrote articles about the true relationship between credit card companies and CCCS. The reports went indept explaining how CCCS is definitely financially backed by credit card issuers. Since I read those articles, I've noticed how CCCS and others carefully word thier publications to avoid stating exactly this. But I once point blanked the question to the local CCCS here and insisted on their answer. They asked me to leave! Does that tell you anything?
A very similar question was asked at freeadvice.com last year. A lawyer who does judgement recovery work gave a very interesting answer. He said that CCCS is funded by cc companies for 2 reasons. #1, they just may get paid and #2, they compare CCCS to a chapter 13 bk because, about 70% of the people that start credit counseling eventually drop out which is about the washout rate for a chapter 13 bk. But, when you quit CCCS the collection dept. has all up to date personal info from where you live to who may know where you are, to where you work, what you make, own or rent, etc. His advice was if you are down to CCCS, to try and declare a Chapter 7 bk.
Even more importantly is how the scores treat cccs. It's on the same line as a bk. So your score takes the same hit with a bk as cccs. Nice, huh.
It's sad that there not is a non profit pro consumer CCCS. Personally, I don't think CCCS should be reported on a person's CR. At least those who go through CCCS are trying to get their act together and paying back their bills. They ought to be applauded - not having their credit wrecked. The system is so totally screwed up. People who pay off their bills through CCCS or have paid chargeoffs or collections are rated the same as someone who has declared Chapter 7. It makes no sense. We punish someone for trying to do the right thing. Dani
Dani: I couldn't agree with you more. I don't understand why they treat it as a bankruptcy when you are paying back every dime owed. Yeah...some (and I stress some) creditors give you a break with interest but you are still paying back every dime owed. Marie: I guess I was one of the lucky ones. My scores were not trashed by CCCS(just dropped out of program in Feb of this year). I guess because my report was not coded to show CCCS(I noticed there is a counseling section on credit report but I don't have anything on that section). I did have the consumer credit couseling statement on two accts in the comment section. However, I was able to dispute that and get the statements removed. I dropped out of programso that I could get a mortgage without getting Genus' permission! Anyway, even though I did have a tough time getting those statements removed, it was worth it to me. I was at my wits end with my debt (over 19,000) and now I have this under control(a little over $3,000 left). Oh and one more thing...I have heard CCCS called an inside collection agency for the creditors. I have also heard that the creditors pay CCCS to get the money they probably otherwise would not get back...
I did CCCS about 10 or 11 years ago for a couple of years. I have no idea what it did to my credit, since I was in my early 20s and just trying to raise 2 babies. As far as I knew at the time, I only had one credit card...low limit store card, my student loans, a couple of finance co loans, and my car. Then my first husband decided to leave me saddled with all that debt and four credit cards that he had filled out in my name and maxed out. He had been hiding and/or trashing the bills for a few months before he left. We had no phone. I didn't even know where he was for a long, long time. I went to CCCS, with whom I had been working, in tears...they had never mentioned these cards in my name. I asked them -- weren't they pulling my credit reports, or did they only do it once at the beginning of the 2 years? The lady there said -- and I'll never forget -- "We only recommend bankruptcy in about 1/10th of 1% of all of our cases, but I'm recommending this to you. It's not your fault this happened, and you have more to worry about right at this moment than trying to hunt down this bozo. Bankruptcy will give you a fresh start." So I did. It was all I knew to do at the time, and I'm grateful I was able to do it.
Aside from negotiating a lower interest rate for you, there's nothing CCCS can do for you that you can't for yourself. They often do more harm than good. If you want to control your spending/budgeting, there are many options: 1. Quicken (my personal favorite) 2. MSMoney 3. Money Matters Gold by Larry Burkett 4. Dome registers available @ office Max, Staples, etc. Here's one person's experience below: http://moneycentral.communities.msn...ssage=136909&LastModified=4675372007188005826
They also arrange checking and savings accounts to those listed in chex systmes via a $50 class and certification. Wondering if the get funding through them as well. Sassy
Explanations from an Insider!!! CCCS of course has become a generic term, although it refers to a specific company - Consumer Credit Counseling Services. I will give some inside information as I work for a major service provider for several "Non-Profit" credit counseing organizations. The majority of creditors that work with credit counseling companies offer what is known in the industry as "Fair Share". Fair share is a "contribution" that averages between 3 and 6% of a customers monthly payment. The customer makes a payment of $30.00 a month to ABC Visa. ABC Visa either allows the credit counseling organization to deduct this amount before the monthly payment is sent or has the contribution billed to them monthly. The customer receives full credit for the monthly payment, ABC Visa writes off the contribution as a charitable donation to a non-profit. The credit counseling organization wins because they are funneling money on what was likely a collection account to ABC Visa; ABC Visa wins because rather than paying an internal collector or selling the account for a percentage, they get the full payment and in most cases some interest as well. They write off the contribution so there are no costs for collection. In short terms the credit counseling organization is an extended collection arm for the creditor. My difficulty is that most grossly overstate their ability to get assistance for the customer. We all have seen commercials "Reduce your monthly payment up to 50% - usually this is BS. The credit counseling company considers a reduction to include any past due amount opposed to the program payment amount. Example: ABC VISA Normal payment $25.00 Minimum payment due $60.00 inlcuding fees, lates. Credit Counseline monthly payment $28.00. They consider this a 50% monthly payment reduction. Most creditors require a monthly payment for credit counseling of 1.5% to 3% of the balance on the account . Look familiar? Because it is usually the regular required payment anyway. Most customers find that there is little if any reduction in the monthly payment, and with many accounts the monthly payment goes up! They also overstate the interest reductions they can get. Most creditors over the past several years have changed the interest reductions they offer. Discover for example has gone from 0% for credit counseling clients in 1999, to 9.9% in 2000, to 17.9% in 2002. American Express will immediately raise the interest rate to the maximum allowed on the account - they will credit the majority of the interest on payoff only if no payments are missed or late while the account is being paid off. The true way the credit counseling agencies are able to pay off large amounts of debt in 5-6 years is using a "snowball effect". If your credit counseling payment is $500.00 a month for 7 accounts with various balances, to meet the payoff time, once a smaller account is paid off the $15.00 payment is moved to remaining accounts, and so on and so on. Of course anyone can see the last one or two accounts splitting this $500.00 payment have a much larger portion applied to the principal, paying them off more quickly. Basically, with the exception of getting fees waived and accounts brought to read current, a few interest rate reductions and getting collectors to stop calling after a few months, there is little a credit counseling agency can do that you cannot do on your own. They also tend to mislead customers when they are enrolling them. They will quickly skip over references to the credit report. The truth is MOST creditors WILL report you are paying through a credit counseling company and this will discourage almost ALL unsecured creditors from offering you credit while you are enrolled and makes it very difficult to get mortgages or auto loans. The only benefit to your credit is over time you show a consistent and timely payment history and your debt to income ratio improves. After the accounts are paid with a zero balance it is up to the customer to fight with the reporting creditor to have references to credit counseling removed. Most will also not explain or acknowledge "Fair Share" and will ask for up front fees as well as monthly "contributions" to manage your accounts.
Re: Explanations from an Insider!!! I believe that most people would be better off just walking away form their debts. You have to get your priorities straight first. If one were to do this, they would need to take into account what bills actually need to be paid and which ones didnt. I would probably never file a BK or go to a CCCS for any reaosn whatsoever. The only time I would consider a Bk is for Business purposes., If I was so worried about my house payment, I would lease option my home and find a cheaper place to live., People fall for all the threats they get from creditors and collectors and they just dont know how to handle it. Filing for BK or CCCS is the last thing anyone would ever want to do, especially if the debt was unsecured....
