Consumer Credit Counseling


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Debt Management a.k.a. Consumer Credit Counselors (CCC)

Consumer Credit Counselors

Often confused with debt consolidation, debt management is an option that is offered through Consumer Credit Counselors (CCC). CCC will help to lower the interest rates on most of their client’s accounts. A lower interest rate can reduce the amount of time it takes to get out of debt. With debt management programs, clients do not pay their creditors directly each month, but rather make payments to the CCC's who then disperse money directly to creditors on their client’s behalf. With debt management plans, you only make one payment a month to your CCC, which is why this choice is often confused with a form of debt consolidation.

For people seeking a lower monthly payment, CCC is probably not the best option. In order to enroll in CCC, you can't be too far behind on your accounts or you will have an enormous monthly payment. Even if you are not behind on your payments at all, the monthly payments are similar to what you creditors already charge, and in many cases, are higher due to extra fees charged by the CCC. CCC can have a negative effect on your credit while you are enrolled in the program, and it can often take between 4-9 years to finish. Due to the requirements of high payments over long periods of time, CCC failure rates are thought to be as high as 75%.

Many CCC agencies have faced scrutiny for the misuse of their "nonprofit" status. Just because an organization says they are non profit, does not mean that you do not have to pay any fees, or that the services are affordable or legitimate. Many CCC agencies receive the majority of their income from creditor kickbacks, which are usually between 7-15% of what their clients pay each month. It’s tough to know if a CCC agency is fairly representing their client when they are getting paid by creditors who want you to keep making monthly payments.

Although CCC can work well for certain people in certain situations, there are many reasons why we do not recommend CCC. We only suggest CCC to those people who have no need to use credit in the future, a steady source of income, and a savings to fall back on in case that steady income dries up.

If you choose to find your own CCC, make sure you are aware of all the fees they are charging you. They may charge monthly fees, per account fees, and may require other contributions. Also, many CCCs tell their clients that they are able to negotiate with all of the client’s creditors which many times is not really the case. Many CCCs do not negotiate with all creditors, and we recommend that you find out in advance if your accounts are accounts that the CCCs can deal with. Find ones that are reputable and have worked for our clients in the past. Please feel free to give us a call if you think that credit counseling may be the right solution for you.

If you are in a situation where you feel that CCC may work for you, we have gone through great lengths to screen numerous counseling agencies to find ones that are reputable and have worked for our clients in the past. Please feel free to give us a call if you think that credit counseling may be the right solution for you.

At S.J. Packman & Associates, before we make any recommendations, our attorneys, certified debt specialists, and paralegals, are trained to ask the right questions to find out about your specific situation. Based on your current income and your financial hardship, we will determine which course of action will work best for you. We do not only offer one path, as there is no one process that can solve everyone’s needs. We will take our time with you and help evaluate what your best course of action should be. Call now and one of our advisors will be there to get you started on your path to financial freedom. There is no obligation to enroll, so don’t delay.

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