Debt Counseling Profits

What is the name of your state?What is the name of your state? NJ

Why is it that Debt Counseling Agencies can negotiate w- collection agencies to the point where they can pull your account out of collections and get it back to the creditor (and work out reasonable long term payment plans for you), but the consumer can not do this on his or her own? I tried negotiating w- collectors from Chase bank and they laughed at me, taunted me, made fun of me, etc. (I would like to send in a complaint about this b-c they did this while I was serious about making payment arrangements). The same day, a credit counseling agency informed me they'd be able to pull my account away from this collector and set up a reasonable monthly payment plan for me...but I have to pay 20 per month over a 52 months. That comes to 52 months x 20 or over 1000 dollars just for the service them distributing my $ to two accounts each month? Any advice on doing this work myself instead? I do not have an extra 1000 to spend these days. I know the Debt counseling orgs call other contacts at agencies and banks....they certainly do not deal w- the collector reps. Who could I call at CCB Credit for example?
Thanks you for your advice DebtGuy and Lady... This site is a wonderful resource. I am a freelance writer and may include it in an upcoming article.

Well first off, not all of these agencies keep their wonderful promises. Several have been shut down by the government for false and misleading statements, advertising and myriad other violations.

Secondly, while they can make those claims that they will get your creditors to agree to it, it doesn't necessarily mean that the creditor does. The creditor is under no obligation to accept their offers or decisions. They can also still sue you if you are in default and they wish to do so.

You may want to double check all the information you can before you commit yourself and your money to this company.

Credit counseling companies are sorta like used car dealers. There are honest ones but the there are some real bums.

The only trustworthy credit counseling companies are those that are community based and usually work under the auspices of the United Way. Anyone you find on the internet is highly suspect.

I don't believe that credit counseling companies have the ability to pull an account away from a collection agency and get it returned to the original creditor. However, it may look that way. If the CCCS contacts the OC with a "deal" then the OC has an incentive to pull the account from the CA. If it does not work out, the OC can always send the account back to the CA.

OCs love CCCS. They even give back a share of every penny you pay back to the CCCS as a "gift". That is on top of the fees you pay to the CCCS.

Why? Because the CCCS is really an extension of the OC's collection effort.

Typically, the OC will reduce their interest to around 10% or so. In return, the CCCS sets the client up on payments to repay the entire balance in 3 to 4 years. The OC has a shot at getting their money back and a "reasonable" amount of interest -- a much better deal that just waiting for the CA to settle the deal.

CCCS can be the right answer for some people. For most, it is an expensive mistake.

Settlement companies are almost as bad. Granted, they don't take kickbacks from the OCs but too many of them load up the fees on the consumer. Too many of them practice a form of deception that misleads the client into thinking settlement is a painless choice that can be handled in easy monthly installments. Not true! Any settlement company that talks in terms of a 2 or 3 year plan is not being honest with you -- that is why mostly they collect their fees up front or are heavily front loaded. If you drop out of the plan, they already have their fees.

A settlement company can save you a lot of money. A ethical settlement company will not ask for any fees in advance of the delivery of services. Settlement is not painless -- it will harm your credit, but if your credit is already shot, then does not make anything worse than it already is.

The worst way to find a CCCS or settlement company is to cruise around the internet.

The best way is to ask until you find someone who has been through the program and was satisified with the performance of their company and the results. Find out who they used. The best advertising is a satisfied customer. The best reference is a satisfied customer.

Some thoughts -- call the OC and ask to speak with the "hardships" department. They might be able to recall the account from the CA and set you up on a monthly payment plan. If not, think about trying to settle the account. You can do it yourself or you can find someone to help -- just be careful as discussed above.

CCCS is FUNDED AND CONTROLLED by the CREDIT CARD COMPANIES !!!

You might want to read this document about CCCS - its long, but well worth the read:

http://www.responsiblecredit.com/resources/documents/white_paper_071204.pdf