Welcome To Financial Elite!

Follow our 200K journey to get out of debt! We share our best money tips to get out of debt and build wealth.

Saturday, November 7, 2009

Bank of America Helps Consumers Learn About Credit Counseling

Every day,consumers are bombarded with information on managing debt, often from sources with varying reputations, including us. This can leave financially strapped consumers confused and unsure of how to start gaining control of their own debt and financial state. Bank of America is helping consumers in these positions by providing though leadership and clear solutions to help them better manage their financial lives.

"Debt settlement agencies are flooding the media with misleading information and in turn, causing confusion for financially struggling customers looking for a lifeline," said Colleen Benjamin, Global Card Services Recovery and Risk Operations Executive for Bank of America. Benjamin is leading debt management work across the industry for the National Foundation for Credit Counseling (NFCC) to help combat misconceptions caused by these agencies.

Since March, Benjamin has been chairing a 40-person work group for the NFCC. The committee members consist of major bank issuers, VISA, MasterCard, American Bankers Association, non-profit agencies and consumer protection advocacy groups. The NFCC promotes financially responsible behavior and builds capacity for its members to deliver the highest quality financial education and counseling services.

Benjamin's work group in particular has three main areas of focus:

- Legislative efforts: There are no Federal regulations for debt settlement industry,

- Product and solution work: Investigating how issuers can support non-profit agencies in their work to help consumers with low or no cost products.

- Consumer awareness and communications: Providing education and awareness of options.

"It can be very confusing for a consumer in choosing between debt settlement vs. credit counseling and who to turn to when you're scared, over extended financially and in desperate need of help." We are working to eliminate and broad reaching, deceptive marketing, practices of many in debt settlement industry and to educate customers about their options," said Benjamin.

Debt settlement firms take their fees up front, typically 15% to 20% of consumer's debt. And even in the best case scenario, where debt is reduced or eliminated, their programs can significantly and negatively impact a consumer's credit score. In the worst case scenario, the firm takes the fee and does nothing to help the consumer. Sometimes, a consumer will eventually find a non-profit credit counseling agency, but is often to far behind point to be helped.

"It is important for customers who are struggling financially to understand all available options and the potential consequences of working with a for non-profit settlement company," said Benjamin. "Customers who start working with debt settlement companies are five times more likely to charge-off one year later than customers working with a non-profit credit counseling agency. The win for everyone with credit counseling is evident."

The Federal Trade Commission (FTC) and Attorneys General from several states are conducting ongoing investigations into the deceptive practices of this industry. The HFCC work group has met with legislators to bring to their attention predatory marketing practices and other concerns. The work group provided the FTC with the top 10 debt settlement companies, misleading information from their websites and the number of Better Business Bureau complaints. Also, provided were copies of several debt settlement contracts--including on contract that charged a consumer $8,000 in fees.

Next steps for the work group include using public service announcements to further educate consumers on the differences between debt settlement and non-profit credit counseling. They will also conduct focus groups with consumers to better understand why they chose a for-profit debt settlement company.

Have you contacted a credit counseling agency? Were they able to help? Did they charge excessive fees and not really do anything?

Related Articles:
I Have A Repayment Plan Set Up With The National Foundation for Credit Counseling And I still Can't Afford The Payments. What Do I Do?



No comments:

LinkWithin

Related Posts Plugin for WordPress, Blogger...