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Credit counseling can't help everyone

A credit card being cut.

TEXT OF STORY

TESS VIGELAND: For a response to Weston's assertions, we turned to Gail Cunningham. She's with the National Foundation for Credit Counseling.

Gail Cunnigham: I think anyone would agree that when people come to us in a terrifically fragile financial situation and we are able to help rehabilitate them to the point that they can repay their debt, that's a success.

Cunningham says the NFCC doesn't gauge the success or failure of its efforts by the percentage of people who pay off their bills through a debt management program.

Cunningham: I don't know how many pay off their debts 100 percent through us versus how many pay through us for a bit and then are able to stand up on their own two financial feet, because to us, both of those are successes.

She also disagrees with Weston's argument that some consumers should not go through counseling and instead head directly to bankruptcy court.

Cunningham: I don't think there's ever a time that it's too late to receive financial assistance, not that we're going to be able to resolve every financial distress that walks through that doors. But to sit down with a counselor teaching them how to survive this rough patch in their lives, that's valuable.

But Cunningham says no one should expect counseling to solve all their financial problems.

Cunningham: We do not have a magic wand under our desk, I say that to underscore that we don't give everybody the answer that they hope for when they walk through our doors. Nonetheless, when things go south and they've had to take a more serious financial decision, such as bankruptcy, then they won't start beating themselves up because they will know that I tried everything else first.

So what's your opinion? Have you gone through the credit counseling process and emerged debt free and financially savvy? Or was your experience more of a let down? We'd like to know - write to us at Marketplace.org.

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I did go through a reputable company in Boise after I lost a job and was unable to pay the minimum on one of my three cards. They were amazed that I had paid on time on all three cards for 10 years with my low income. They told me about universal default, which I had never heard about. And sure enough, within 30 days, all three credit cards demanded huge minimum payments and increased the interest to 30% from 6%. No way could I manage that. The debt reduction service recommended bankruptcy, which I reluctantly did. Now I am credit card free and have a healthy savings account.

NFCC approved credit counseling over promises and under delivers, and needs to be regulated. I sought help in 2004, when one late payment significantly increased the interest rates on all of my credit cards. Though the counseling service promised to reduce all of my interest rates, and projected a target date for me to be debt free...instead, my American Express interest rate went up 14 times and still reached 30.22%...with added fees. When I alerted the counseling service representative, I was informed that AMEX would reimburse the interest and fees after the card was paid off. Well, my principal was $14,158.06 when I started the plan, AND I paid an additional $12,828.08 in interest over a 44-month period. No refund, and a destroyed credit rating. And despite paying off the card, along with the outrageous interest and fees, AMEX added an additional $537.25 in fees after the fact, which they now consider delinquent. For the past eight months, I get up to five calls a day from AMEX or their collection agency NCO ....giving new meaning to "never leave home without it."

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