"Debt Recovery" means more than credit counseling

My last post talked about the difficulties I face in defending credit counseling. But the debt recovery industry is bigger than that.

Consider settlements. I support the idea of debt settlements when it's right for the consumer, and when the settlement negotiator has made everything clear (including the risks, costs and consequences to one's credit).

Not everyone in the credit counseling world agrees with me. (And virtually no one in the settlement industry agrees with me about credit counseling.)

This is where we get into insidious creditor control of the counseling industry. It would be great to have one non-profit organization that could triage clients and get them to the best solution; if it's bankruptcy, then here's an on-staff BK attorney. If it's credit counseling, then we'll set up a DMP. Or if it's settlements, then let's begin negotiating. Unfortunately, any credit counseling organization who tries this will be cut off from funding and eventually go down the tubes.

I guess they could quadruple the fees they charge their clients if they want to survive. I don't like that solution mainly because I think the creditors should pay for the counseling. All the "consumer advocates" who point to creditor funding of the counseling industry aren't considering the alternative: "consumer-funded credit counseling." (I know many of them secretly wish for "taxpayer-funded counseling" but I don't even want to think about that.)

Of course, the other reason they can't raise their fees is because most states have laws in place limiting them. So they have to preserve their creditor funding because state legislatures are forcing them to.

So it's "offer settlements, get de-funded". And the NFCC could care less. They don't seem to want their agencies to offer choices to their clients. They don't want to let their members help consumers restore the integrity of their credit reports, or repair the damage collectors have done to their credit scores. They just don't seem to care about anyone but the creditors. That has to change.

Comments

[Richard Nikoley]

Jeff:

Perhaps a bit ironic, but you mentioned the NCC in your last post, and then talked about non-profit debt triage in this one, which is precisely what the NCC was trying to accomplish.

Lots of info here:

http://cesr.us/

At any rate, I didn't actually meet Harvey Warren until after the FTC takedown, but in many conversations with him, his legal counsel, and other colleagues, I'm convinced he was onto something big and important and was simply too far ahead of his time.

I believe also that Dr. Robert Manning, who knows and understands the events surrounding the NCC even far more than I, also generally supports Harvey Warren's take on the events.

[Jeff Michael]

Thanks for commenting, Richard, but I disagree strongly with you on this.

I've looked at the CESR web site before, and seems to me to just be an effort to rewrite history. I used to respect Dr. Manning, but for me he sacrificed much of his credibility when he threw in with these guys.

Whatever they claim they were doing, I don't think helping debtors was foremost on the NCC's agenda. It seems to me they cared more about lining their own pockets (and glorifying certain individuals withing the company).

A non-profit "debt triage" like I mention is not what the NCC was up to: specifically, consider their telemarketing campaign and the way they handled their debt negotiation: http://www.ftc.gov/opa/2004/05/ncc.htm

I believe I'll lose this debate in the long run, though. Warren is cunning, and tirelessly committed to his spin of what happened. He and Manning will write more books and eventually come out looking like victims. Heck, if he's already succeeded in convincing you that he's something other than what he was, then he's probably already won.