Two Topics from the Course

Just about every topic that we’re discussing in the course has been in recent news, and I’ll touch on just a couple.

Credit Card Debt

On July 11, 2019 Yahoo Finance reporter Sibile Marcellus writes, “Americans owe more than $1 trillion in credit card debt. And according to a new CreditCards.com poll, households with credit card debt outspend those without debt in most discretionary spending categories.  What’s more, 18% of households with credit card debt are unwilling to cut back on any nonessentials like takeout and leisure travel.

From our earlier exercise we know how damaging that credit card debt can be.  It’s also one of the most avoidable.  Now might be a good time for you to reread Judge Ninfo’s “Top 20 Mistakes Made by People Who Have Filed for Bankruptcy”.

Debt relief

On July 11th, the Federal Trade Commission (FTC) announced a new case against two operators of student loan debt relief schemes, allegedly luring people with false promises to pay down student loans and to lower monthly payments.  Many borrowers went months, sometimes years, before learning their student loans weren’t being repaid, and were left far worse off than when they started.

Once people are knee deep (or higher) in debt, they seldom know where to turn.  Feelings of embarrassment make us want to make inquiries online rather than to seek help locally.  Feeling desperate and helpless, we grasp at any shred of hope for a better future.

On July 9th, the Consumer Financial Protection Bureau reported settling a lawsuit against a company named “Freedom Debt Relief”, in which the company agreed to pay $20 million in restitution to affected consumers.

$20 million sounds like a lot, and it is!  But typically in these cases an individual consumer receives back only a small percentage of what they lost.  Feel free to look more deeply into this one and let me know what you learn.

This case brings to mind three terms that seem to confuse even people who should know better:

  • Debt settlement,
  • Debt consolidation
  • Debt management program

The FTC explains them in Coping with Debt.

Commenting on the Freedom Debt Relief news, Washington Post personal finance columnist Michelle Singletary suggests, “If you want low-cost debt relief, I suggest you get help from a nonprofit credit-counseling agency. To find a local agency, go to the National Foundation for Credit Counseling’s website — nfcc.org. The agency can help you set up a debt-payment plan with a relatively small monthly fee.

NFCC member agencies – all nonprofits and all accredited by the Council on Accreditation – offer services such as:

  • Budgeting
  • Credit report reviews
  • Financial education
  • Credit counseling (including student loans)
  • Debt management plan
  • Housing counseling, bankruptcy counseling and bankruptcy education

The FTC recommends, “If possible, find an organization that offers in-person counseling.”

A few years ago there were several NFCC member agencies with physical locations dispersed throughout Indiana, including one right here in the seat of Tippecanoe County, which also houses one of the state’s eight bankruptcy courts.  Beginning c. 2010, there was a series of mergers and acquisitions and one of the first dominoes to fall was our Lafayette office.

Today, to my knowledge, there are only two NFCC agencies with Indiana locations.  These are Michigan-based GreenPath and Ohio-based Apprisen.

Apprisen offers a 12-month coaching program, and the Indianapolis office has been awarded grant funds to work with employers to offer financial coaching as a benefit to their employees, at a low cost to the employer or employee.  Here is a descriptive brochure with contact information for the Indianapolis office.

Whether or not you’re at the end of your rope, I believe that any NFCC member agency still offers a no-cost initial consultation with a well-trained counselor.

Maybe they’ll say that you seem to be on the right track and make a suggestion or two, and maybe they’ll offer additional options.  In any case, they’ll explain any costs up front, so it doesn’t hurt to check in.

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