Aafes
Viernheim,#2Consumer Comment
Mon, June 12, 2006
Sorry to hear you fell for this scam. Credit counseling is nothing more than that. They entice you by saying they have "arrangements" with thousands of creditors to lower interest, stop late fees and it will help restore your credit - all b.s. They take your information and send a "proposal" to the creditor (mail or electronically). The proposal advises the creditor you have contacted them for assistance and asks that your interest rate be lowered, account reaged and fees stopped. A proposed monthly payment to the creditor is based on the balance you provided. A large creditor will receive thousands of requests a week and may have less than 20 employees working on these requests. By the time your proposal is processed there is a 90% chance the account has cycled, your balance is higher and the minimum proposed payment is too low. The proposal is rejected asking for a higher payment. Your payment is made through the agency and is inadequate so a late fee assesses. A vicious cycle that often goes on for months before it is resolved. The agency is usually understaffed and the proposal correction takes weeks. All the time the collectors are calling you, you tell them to contact the agency, the agency tells them that a new proposal is coming. On and on. By the time everything is running smoothly your balances have increased, your credit is marred further with "lates" and the time quoted for the program is greatly extended. All to the benefit of the agency, they will collect your "donation" as well as donations from the creditors. Creditors view - To a creditor "credit counseling services" are little more than an extended arm of their collection department. Some creditors will lower your interest and stop fees as they are saving money paying collectors to call you. A portion of what you pay monthly to a creditor is often given back to the credit counseling agency as a "donation" - the creditor writes it off on their taxes. The credit counseling agency often asks for a "voluntary donation" from the customer. You DO NOT have to pay this with a non-profit agency and can elect to stop paying it at any time. The agency typically expects payment by automatic deduction. Money is deducted monthly from your account and usually "held" before payments are processed for forwarding to your creditors. Most large creditors accept only "batch" payments weekly, biweekly or monthly - several customer's payments in one check or electronic transfer which may then require 5 business days to process and post to your account. If the creditor has not changed your due date, and you did not make extra payments to the creditor in the beginning, your payment continues to post as late. That is another scam. Most agencies will tell you to continue to make creditor payments for one or two months until the proposal is accepted (what happened to "we have arrangements with the creditor"?). The agency also wants to deduct their payment during this time. If you called them because you could not afford your payments, how do they expect you to pay the creditors and the agency??? ONE missed or late payment by the agency can result in MANY creditors dropping your account from credit counseling status and immediately increasing your interest to the highest allowable rate, as well as now charging fees. As for improving your credit. It simply is not true. Once the plan is working well (after several months of lates) the only real improvement you will see is timely and consistent payments reported. Some (very few) creditors will remove previous late reporting from your report. Almost ALL will report the accounts are paid through credit counseling. To a future creditor this report is a very small step from seeing "bankruptcy" on your credit profile and many view it as exactly the same. The truth is bankruptcy is cheaper and the affect on your credit profile is about the same or less. In many cases a lender that sees you have a discharged bankruptcy will approve you (albeit at subprime rates) before he will approve you with a history of credit counseling. The lender knows you are not able to file bankruptcy again for a number of years. You can enter credit counseling again the next day after the loan is approved. There are alternatives. Initially, if you are behind and in a bind you have to deal with collectors if you want to pay. Once you are caught up your account returns to normal status except for the damage to your credit profile. If the objective is to get out of debt. Keep strict records of every dime you spend for one month. Review at the end of the month. Most people are VERY suprised as the amount they spend on coffee at work, soft drinks, eating lunch one time a week instead of packing it, and other expenditures that could be signifigantly reduced. Change your habits in these areas and send EVERY cent to creditors, beginning with those furthest behind, to get current. If possible get a part time job. Again send every cent to the creditors. Once current, analyze your monthly payments. If you have 10 creditors and pay out $500.00 a month begin with the smallest creditor and begin sending extra money (that you found from your unnecessary expenditures) to that creditor until paid off. Now, take the second highest creditor and send the entire payment due plus the money you were sending to the first creditor you paid off. Continue with this process, applying the full $500.00 to the creditors until you liquidate your debt. Simple alternatives that require self discipline. Difficult for many, but totally achievable.
Christopher
Lynnwood,#3Consumer Suggestion
Sun, June 11, 2006
I to was a victim of Family Credit and I made everything right by changing to the "freedom Point". I suggest you all change to a credit service that is with the BBB like for example "the freedom point" and call all your creditors and inform them what the problem is and that you are changing from FCCC to another company in solving these problems. I did this and everything has been fine since. I feel like I am back on the right track. I suggest you to do the same. I did not trust FCCC after they caused me to go further in debt. I suggest that you do something about it right away! Sincerely, Christopher