Family Credit Counseling Corporation ripoff, avoiding my calls, increased my debt, rude, fraud Lauderdale Lakes Florida

Credit counseling is a bad decision. I used to work for a credit counseling company.

These companies, under the guise of being non-profit solicit customers to enroll. They often pressure customers to make a "voluntary donation" per account. They skirt the law by also having "back end" processing companies that are for profit, usually owned by the same people. The back end companies are paid by the non-profit organization to provide services to the non-profit such as payment processing.

Most will focus their advertising on their thousands of "agreements" with creditors nationwide. In general, creditors hate credit counseling because they are difficult to deal with. They are generally inept at processing payments and additionally will "float" a customers payment for a week to 10 days before crediting it to their account.

The credit counselors will RARELY call a creditor to make arrangements, instead they will mail a form letter to the creditor called a "proposal" - asking that interest be reduced or stopped and fees waived. They rarely, if ever, follow up to see if the proposal was accepted. They simply assume, if they did not recieve a letter "declining" the proposal that all is well. Therefore, picture a myriad of credit counselors, with hundreds of thousands of clients, sending "proposal" letters to an individual creditor. Compare staffing of hundreds of companies generating these letters to a staff of perhaps 25 people working in the credit counseling office of a major creditor. The creditor is simply not equipped in most cases to respond rapidly to a proposal.

Yet the credit counselor gleefully takes your payment from your bank account, you are sitting at home refusing calls from your creditors as the agency has told you to do so. Once your payment is taken it is RARELY sent immediately to the creditor. Most major credit card companies DO NOT accept individual checks from credit counselors but rather, require the credit counselor to send payments in "batch" form either electronically or one check covering several accounts. Two things now occur - your payment was taken from the bank, held for float time and then until the batch is processed, now is received and must be posted by the creditor.

Now your due date has passed. The creditor still has not approved the proposal so your payment is late. A late fee is applied. A few weeks later, if that early, the proposal is reviewed - your account history is looked at and suprise - your last payment was late, a fee accrued, interest accrued, overlimit fees accrued - your balance increased. Your proposal payment was based on the balance you provided - now it is not adequate for credit counseling under the creditors terms - the proposal is rejected and returned to the credit counselor - now the agency must contact you to aprove a higher amount. The process begins again.

During this initial stage the credit counselor will also tell you to try and continue to make your regular payments for a month until the proposal is accepted - Okay, you could not afford the payments, which is why you called them. Now they expect you to make this payment, as well as one to the agency.

Creditors view credit counseling as an extended arm of their collection department. One that collects money for them, does not have to be paid (although most will pay a small percentage of your payment back to the agency from each payment) and is less expensive than hiring and compensating in house collectors. Most creditors will not change the reporting on your credit profile and will do nothing to prevent your account from charging off should the credit counseling agency be late with a payment.

No matter what the credit counselor tells you the ORIGINAL TERMS of your agreement with your creditor are ALL the creditor is legally responsible to honor.

How much is the agency profiting. Under IRS regulations the agency must meet non profit standards and provide "education" on credit to its customers. Most do so by sending you a small brochure every few months to meet the requirement. As indicated before most agency owners also own the back end processing service companies which are for profit - a conflict of interest at best. The agency I worked for was owned by one man, started at his kitchen table - in less than 10 years he had a large agency with several hundred employees, a virtual mansion, several high value cars, a boat and took elaborate vacations. But remember, this is all from a non-profit service.