Credit/Debt Recovery

A situation in which credit counseling can't help...

This could only happen in Great Britain, I think. (link)

If this were to happen in America, the couple would have filed bankruptcy a long time ago. I'm not up on British bankruptcy laws, so I don't know what remedies are available to them. I do have to confess that my book would be of little use to these folks.

The role of good journalism

I just heard an interesting interview yesterday on the local Walt Bodine radio show. He had a guest on discussing political advertising. He talked about how people often ask why political ads are allowed to make such misleading and sometimes downright false claims.

The answer, of course, is that there are first amendment issues, and they basically get to say what they want. The best defense, he said, is good objective journalism.

My sentiments exactly. When I resist government legislative restrictions on credit counseling and the debt recovery industry, my position is that it's not the government's place to limit or regulate what credit counselors do (unless they're outright breaking the law, and some credit counselors do that). If there are bad players in the credit counseling industry, it's up to journalists, loudmouth bloggers like me, and entities like the Better Business Bureau to step in and call them out.

What we don't need is government passing more restrictions on an industry they don't understand. And right now, the only people helping legislators understand the industry are those with enough money to hire lobbyists--and that ain't the true non-profits.

I'll continue to maintain that if the media does its job well, we'll be able to keep in check many of the profiteers in the credit counseling and the creditor world as well. If an information campaign about, say, universal default warned everyone not to sign up with creditors and banks who employ that despicable practice, the creditors and banks would eventually stop doing it. Much better than rushing to Washington to get our Big Brother-nanny government to take care of us. That keeps us weak, dependent, and powerless.

What is Primerica?

A friend of mine was recently contacted by Primerica. They wanted him to come work for him, and it sounded like they were sort of like credit counseling, so he asked me if I'd ever heard of them.

I hadn't. They're with Citigroup, so they couldn't be a complete scam, right?

As it turns out, Primerica is a multi-level-marketing arm of Citigroup. They do offer a "financial needs assessment," that isn't exactly like credit counseling.

What it actually is is a marketing tool to sell Citigroup's insurance and investment services. Their financial needs assessment may be helpful to people in the market for the kinds of services Citigroup offers, but it's less like a counseling session than it is a sales pitch.

That's why we should be wary about for-profits in the credit counseling business. Consumers in trouble with debt are very vulnerable, and it's a bad idea to send them into a pack of wolves who see only dollar signs.

I don't think that's what Primerica is, though. Their target demographic is more upscale than the typical credit counseling client. They're not looking to prey on people on the verge of bankruptcy. They're looking for financially stable couples to sell insurance and investment services to, and maybe potential salespeople for their multi-level marketing structure.

But there are plenty of genuine credit counselors who want to become for-profit entities. This is a desire we have to examine carefully as this issue continues to play out. And of course they yell "the creditors are the real bad guys here!" to distract us from examining their profit motives. And of course they're right, the creditors are the bad guys, but is it really a good idea to sell credit counseling services the way Primerica sells insurance?

Get Smart About Credit Day

Today is "Get Smart About Credit Day," apparently.

Baby's Identity Stolen

I'm back online after a few weeks of transition; I was minus an internet connection during my recent move. Now I've finally gotten my DSL connection up and running...

I'll return by pointing to this article about the youngest-ever victim of identity theft.

Now, if you're not convinced that you need to check your credit report and make sure you're identity hasn't been stolen, I don't know what else to tell you.

Update on Universal Default

My buddy Paul Richard from the Institute of Consumer Financial Education (ICFE) has an article up about Universal Default.

The Office of the Comptroller of the Currency (OCC) has gotten into the act; they have declared that universal default is an "unacceptable" practice for national banks. This is a good development, IMO.

Read all of Paul's article here.