Debt Relief Companies Form New Consumer Advocacy Organization
Raleigh, N.C. (Feb. 9, 2011) – In an ongoing effort to raise standards in the debt relief industry and improve consumer protections, a diverse group of leading debt relief companies have formed a new organization devoted to consumer advocacy. The organization is spearheaded by Steve Rhode, aconsumer advocate and founder of the website GetOutofDebt.org. Membership is by invitation only to companies who promote transparency and have a demonstrated track record in properly helping consumers address financial hardships.
The American Association of Credit Counselors (AACC) will include nonprofit credit counseling agencies, debt management companies, debt settlement companies and other providers who are focused on serving consumers in financial distress. The AACC name reflects the revival of an organization that existed with a similar mission but has been defunct for more than 20 years.
This is the first debt relief association formed solely to find collaborative ways to work for the betterment of consumers rather than to lobby on behalf of the industry.
“We’re not an official association, we’re not a traditional industry group that anyone can join as long as they are willing to pay the membership dues,” said Rhode, one of the most vocal and active advocates for consumer interests. “We’re really a club, a club that only accepts the best companies who’ve demonstrated a commitment to the highest standards in serving consumers and who want to work collaboratively to protect consumers facing money troubles.”
All member companies in the AACC have agreed to a set of common standards, including:
• Charging no upfront fees for debt settlement services;
• Providing customers with good faith estimates before they enroll in any debt relief service;
• Outlining the potential risks of a debt settlement or debt management program in easy‐to understand language;
• Providing openness and transparency regarding performance results; and
• Making top management readily available to their customers.
The group has adopted the motto “Putting Consumers First.”
“We are thrilled to be a part of this group, which is really focused on creating educated consumers and campaigning for their rights and protection,” said Chris Schornak, president of Debt Solutions Network, one of the founding members. “There are a wide range of debt relief options out there, but not every option will work for every individual. It’s exciting to see a group of companies standing up and saying that education is more important than deception and that the needs of the consumer are more important than a company’s bottom line.”
The genesis of the organization came out of an event Rhode hosted in late November called “A Group Conversation about Restoring Truth to Debt Relief.” The day‐long meeting brought together heads of debt relief companies, consumer advocates and regulatory agencies to discuss ways to improve consumer protections while still making debt relief services available to those in need and explore ways to increase the credibility of legitimate debt relief providers.
“That meeting created some great conversations among various debt relief providers about ways to better the industry as a whole and to make services from credible providers more readily available to consumers,” said Rhode. “Those discussions have continued over the last few months as these companies, while competitors, have found they have common interests and a shared vision for improving the industry. They felt there would be strength in numbers and have decided to work together for change.”
Charter members of the organization are:
• Active Debt Solutions, a Florida‐based company that offers credit counseling, debt consolidations, bankruptcy referrals, and debt settlement programs;
• Cambridge Credit Counseling, a Massachusetts‐based nonprofit that offers financial education and debt management services;
• CareOne Services Inc., a Maryland‐based company that offers credit counseling, debt management and debt settlement programs and bankruptcy referral services;
• Consumer Recovery Network, an Idaho‐based company which provides DIY instruction and offers debt settlement services
• Debt Solutions Network LLC, a Michigan‐based company that offers debt settlement and debt consolidation services;
• New Era Debt Solutions, a California‐based company that offers debt settlement services; and
“We take great pride in being part of a group that puts consumers first,” said Alex Viecco, vice president of New Era Debt Solutions. “This is something that has been lacking in this industry for a very long time.”
The original AACC was created in 1955 and disbanded in the 1980s.
About the American Association of Credit Counselors
The American Association of Credit Counselors was founded with the mission of “Putting Consumers First” in debt relief services. Membership in the organization is by invitation only and all of the members have agreed to meet specific standards and principles in offering their services. The AACC has eight members. For more information, visit http://newaacc.org/.
Individuals and small business owners burdened with huge credit card debt balances of $100,000 or more are turning to debt settlement coaching, negotiating their own settlements, and saving thousands on third-party negotiation fees.
Consumers and small business owners are negotiating with their creditors and settling their own debt obligations without the need for professional third-party assistance, according to ZipDebt.com, one of the nation’s leading providers of self-help financial coaching for struggling consumers.
America’s economic recession has pushed millions of individuals toward bankruptcy with massive levels of debt. As small businesses fail and previously high-income households face the new jobless environment, credit card debt loads of $100,000 or more have become much more common. For people with such high debt balances, formal bankruptcy often means filing under Chapter 13, which can be a difficult five-year process that entails partial or full repayment of the debts. Debt settlement through creditor negotiation provides many of those debtors with a realistic alternative to bankruptcy.
According to Charles J. Phelan, founder and President of ZipDebt.com, consumers and small business owners can avoid Chapter 13 bankruptcy if they educate themselves about negotiating compromise solutions with their creditors. “Many of the people who come to us have very large debt balances, and none of the usual ‘one-size-fits-all’ debt solutions will work for them,” Phelan says. “We teach people a process called Fast-Track Debt Settlement™. It has the most successful track record compared to any other approach to debt settlement.”
Phelan recommends the “do-it-yourself with coaching” approach to debt negotiation and settlement because it gives consumers complete control over the process. Instead of paying thousands in fees to a professional firm, consumers can apply 100% of their available resources to eliminating problem debt. “There is no reason for someone who owes $100,000 to pay $15,000 in negotiation fees,” Phelan says. “We’ve taught thousands of people how to settle their own debts, and it’s a much faster process without the stiff fees.”
For additional information on debt settlement coaching for high balance debtors, a free report is available for immediate download at ZipDebt.com.
About ZipDebt.com
Charles J. Phelan has been helping consumers avoid bankruptcy since 1997. A former executive with one of the nation’s first debt settlement firms, Phelan launched ZipDebt.com in 2004 to provide an affordable alternative to professional debt services. ZipDebt.com’s audio-CD training course is supported with personal one-on-one consultation and follow-up coaching, and the program successfully helps debt-challenged consumers achieve professional results for a small fraction of the usual cost.
One of the purposes of the Debt Bytes Blog is to raise awareness and educate people on the topic of debt. This is not a new concept by any stretch. There are many sites on the web that have a great deal of information and some of these have HUGE readership and reader participation.
Not all are created equal.
Watered Down Content Sites
Some personal finance web sites have a great deal of exposure and publish a ton of material. Some content heavy sites barely scratch the surface on a particular topic because they are geared toward mass appeal. In other words, the more “milk toast” the message, the more reader applicability.
I can think of several really big sites with content updated daily, but that allow no interaction with their readers through open commenting. These sites also tend to have a lot of ads. Milk toast (bland) content with lots of web traffic to sell ads. Not a fan….
Informative & Innovative Sites
On the other side of the spectrum you have web sites with good content and large readership that allow and encourage comment participation. Some of these also have community forums that are a great place to learn even more specifics into a particular aspect of debt and credit.
One of the sites that I like and have frequented for several years is www.debtconsolidationcare.com. I in fact post in the forums on that site anonymously as time permits.
The DCC site offers many great self help tools and feedback for debt relief with a focus on debt settlement, debt management, dealing with debt collection, what you can do to repair and improve your credit, debt consolidation and more. Big fan….
I have connected with the site owner Vikas on several occasions. One of things that so impressed me about Vikas and his motivation and vision for the DCC site – his focus on providing free, or affordable resources for consumers who are already struggling financially. His goals are similar to what I endeavor to provide here on Debt Bytes and through my company, Consumer Recovery Network.
Over the years that I have participated by commenting in the forums at the DCC site, I have witnessed many people use the site as a resource for their own debt relief efforts very effectively and who then continue posting their experience and sharing with others long after their own personal financial storm had passed – Paying forward the help, feedback and support that was available to them.
The Debt Consolidation Care community is a stand out, as are other sites that I will cover in the future.
I encourage Debt Bytes readers to check out the DCC site and to openly participate when there.
In their “PAST DUE” report, I found some of the most pro consumer recommendations for amending state and federal collection laws I have seen to date. Here are some of the key recommendations the report suggests should be adopted in order to better protect consumers and lessen the drain on publicly funded court resources:
The FDCPA and parallel state fair debt collection laws must be expanded so that the list of required “baseline” items also includes: (6) a statement explaining the consumer’s rights under the FDPCA; (7) the name of the original creditor, whether or not the consumer requests it; and (8) an itemization of the total principal, interest, fees and other charges that were added to the debt:
“Baseline” Information (currently required)
1. Amount of debt;
2. Name of creditor;
3. Statement re: assumption of debt validity in the absence of a dispute;
4. Statement re: if the debt is disputed the debt collector will “verify”; and
5. Statement re: upon written request the collector will provide name of original creditor if different from current creditor.
Recommended Additional “Baseline” Information
6. Statement notifying consumers of two significant rights they have under the FDCPA;
7. Name of original creditor; and
8. Itemization of: total principal, interest, fees and other charges that have been added to the debt.
The report recommends additions of items 6 though 8 to the already required baseline protections found in items 1-5. While I see recommendations 6 and 7 as good, I really like number 8! It is of major importance that there be an opportunity for consumers who find themselves in a position to effectively bounce back from past financial setbacks be able to do so with a correct measure of what they legitimately owe.
There needs to be an accurate accounting of what the true balance of debt is, rather than what are all too often highly inflated and sometimes bogus fees.
The report further identifies what is dubbed “Baseline Plus“recommendations:
The FDCPA and parallel state fair debt collection laws should also be amended to require that debt collectors make a good faith effort to retain certain “baseline plus” information to the extent possible. A debt collector should be required to provide all “baseline plus” information it has to the consumer within five days after their first communication. Courts should also require that all available “baseline plus” information be attached to any complaint in a debt collection lawsuit:
Recommended “Baseline Plus” Information
9. Proof of indebtedness signed by the consumer;
10. Date that debt was incurred and date of last payment;
11. Chain of title if debt has been sold;
12. Original debt;
13. Each payment credited to the debt;
14. Each fee and charge added to the debt;
15. Each payment credited against those fees and charges;
16. All other debits or charges to the account; and
17. Explanation of the nature of those fees, charges, debits, and all other credits to the debt, by source and amount
Item 9 will be hard to come by if asking for a wet ink signature due to the prominence of electronic acceptance of terms and internet applications for credit.
Numbers 10, 11, 12, 14 & 17 would certainly put the nail in the coffin of most zombie debt that exists today. It would also crimp the reselling of portfolios of bad debt that had already been sold at least once prior to the enactment date of any future legislation that includes these, or similar provisions.
None of this is a bad thing.
The report discusses the drain on court resources around the country resulting from debt collection lawsuits that are filed mill style and shows how the collection of unsecured debt has its own “robo signing” issues similar to the well published woes of foreclosure mill law firms across the country. Past Due is well worth the read.
Amendments to the FDCPA are still some time away.
If some of the “Plus” lines found in the report from Consumers Union make it into the amended federal collection laws, I predict the following:
Fresh charge off debt portfolio values will increase to highs not seen since 2005
Debt buyers will adapt their portfolio performance goals and move to sue sooner after purchase than later
I believe that most of the suggestions found in the CU/EBCLC report will not only lead to better consumer protections, but also create better recovery performance at legitimate companies operating in the collection space.
When you work with consumers who are trying to recover from financial struggles of the past or present for any significant period of time you can honestly say; the vast majority of people want to pay their obligations. You should certainly be able to do so with dignity and confidence that you actually owe the debt, are not paying too much, paying the right party and are able to put the debt behind you for good and move on with your life.
If you need professional assistance in dealing with past due bills, be sure to connect with debt relief service providers that are members of the AACC. AACC member companies are committed to putting you and your goals first. Click here to find an AACC company you can speak with: American Association of Credit Counselors
Debt Bytes welcomes your participation in discussing this important topic in the comments section below.
“I was so fortunate to find Consumer Recovery Network. My debt specialist helped me to settle my account and to dismiss the lawsuit. Since that time, she has helped me to settle three other accounts. I am impressed with CRN and their honesty and their direct approach to me, as a client. They return my telephone calls, help me when I need help, and they have compassion for me, the client. I am very grateful for their help and for the professional knowledge that they bring to their work.”
“When I first signed up for the program I received the cds and printed material and studied them and they were a great help and reassurance, but as you get into the process you end up with so many questions and concerns that nothing takes the place of that live voice on the phone or an email. The help of the specialist I worked with was critical to my success...with the help of my specialist I have settled 4 accounts of nearly $40,000. I don't know what I would have done without the specialist's help.”
