A column on personal finance prepared by the Virginia Society of Certified Public Accountants


(June 18, 2003) – Facing a stack of bills you can’t pay? Tired of getting calls from irate creditors? Need help sticking to a budget? Serious about getting your spending under control? If you answered “yes” to any of these questions, the Virginia Society of CPAs recommends that you contact a non-profit credit counseling service, such as the National Foundation for Consumer Credit (NFCC).

NFCC member organizations, most of which are known as “Consumer Credit Counseling Service (CCCS),” are dedicated to helping consumers experiencing difficulty meeting financial obligations. The services provided typically include individual counseling, debt education, budgeting, and working with creditors to stop collection calls and facilitate repayment.

Many people are reluctant to talk to a credit counseling agency because they are concerned about providing details about their personal financial life and don’t trust the process. Here’s what you can and can’t expect when dealing with a reputable non-profit credit counseling agency.

Expect Professionalism

Consumer credit counselors affiliated with NFCC are specially trained and independently certified. The counselor will help you examine how you got into debt, work with you to create a plan for paying it off, and collaborate with you to find ways to change your behavior so it doesn’t happen again.

In a confidential setting, the counselor will ask you to provide information about your income, expenses, and debt. He or she is expected to review your financial situation in a non-judgmental manner and help you develop a spending plan that covers reasonable living expenses and payments to creditors.

Don’t Expect a Quick Fix

Repairing your credit takes time. Stay away from debt-settlement companies falsely promising to settle your debts for little or no money and without damaging your credit rating. Sales pitches that sound too good to be true probably are.

Expect Counselors to Negotiate on Your Behalf

If appropriate, a credit counseling agency may recommend a debt restructuring or debt management plan, a systematic way to pay down your outstanding debt. In such plans, the counseling service negotiates with credit card companies and other lenders on your behalf for lower interest rates and the forgiveness of late fees and overdue interest. Often, these agencies can get concessions from creditors that you may not be able to obtain on your own. Your creditors’ payments are consolidated into one payment that you make to the agency, which, in turn, makes the monthly agreed-upon payment to each of your creditors.

Don’t Expect to Use Your Credit Card

In most cases, when you participate in a debt management plan, creditors close your account or suspend your credit privileges. You must not apply for or use any additional credit. Exceptions may be made for justifiable reasons. If, for example, your job requires you to travel, you may be allowed to maintain one credit card for specific work-related uses.

Expect Reasonable Fees

The services provided by members of the National Foundation for Credit Counseling are typically provided at low or no cost to clients. Member agencies typically offer one-on-one budget counseling at an average cost of only $12 to the consumer, and some offer this service for free. The total average monthly fee for a debt management plan is about $11 per month, but, some member organizations can offer these services for less or at no charge.

Don’t Expect to Wipe the Slate Clean Immediately

A debt repayment plan does not erase your credit history. Under the Fair Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years. While your account is being handled through a debt repayment plan, creditors will continue to report information about your accounts. For example, creditors may report that an account is in financial counseling, that payments have been late or missed, or that write-offs or other concessions have been made.

While CPAs readily admit that there are no easy “outs” for consumers who get in trouble, credit counseling services are valuable resources in developing a plan for becoming financially stable and debt free. To locate a credit counseling office near you, call the National Foundation for Consumer Credit office locator number at (800) 388-2227.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at

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