Consumer Credit Counseling

The first credit counseling agency was created back in 1951 when credit card companies created the National Foundation for Credit Counseling.  The NFCC was charged with promoting what it termed "financial literacy" with the objective of reducing bankruptcies throughout the United States.

By 1993, the Associated of Independent Consumer Credit Counseling Agencies or AICCA was formed, citing the need to develop standards of ethical conduct among creditor counselors. 

The final organization formed to meet the growing demand for debt counselors was the American Association of Debt Management Organizations or AADMO, which is the largest credit counseling consortium in the world.

Bad Credit Counseling Representation
Consumer credit counseling agencies work on behalf of the credit card companies and not the consumer. The public believes that their monthly payments will be negotiated with the credit card companies and they are not. The credit card companies give the credit counseling agency a fixed amount they will accept each month regardless of the consumer’s circumstances, and this is bad credit counseling representation.

Since the bankers created the NFCC and the credit counseling industry, they also pushed through Congress the new bankruptcy legislation to make consumers obtain credit counseling prior to a bankruptcy discharge. The bad credit counseling representation picture that emerges is a revolving door for the consumer seeking assistance, when in fact the same door that lead the consumer in debt is supposed to open and help the consumer get out of debt.

Free Debt Counseling
One of the reasons credit counseling agencies are able to offer their services for free is because of the compensation agreements these agencies have with creditors.  For example, a credit counseling agencies is often compensated by the same creditors to whom the debt payment is made.

This fee is sometimes referred to by the credit industry as "Fair Share" with compensation in the area of 5 - 15% of the debt amounts recovered by the credit counselor. 

Debt settlement versus credit counseling
The credit counselor’s job is to prevent the debtor from going into bankruptcy. In other words, the credit counselor is working with you to make sure that you do everything you can to make the payment. It doesn’t matter if you are $50,000 dollars in debt, or $50 dollars in debt the bad credit counseling representative is there with the sole intention of getting you to make your payment.

As long as the credit counselor can make a payment arrangement with you, he or she has done their job. One thing that the debtor needs to understand is that when the debtor is speaking with a credit counselor, the debtor and credit counselor are not on the same page.

While the debtor’s main intention is to get out of debt the credit counselors main intention is to get you to make a payment arrangement and stick to it. They could care less if you’re stuck paying off a debt for the rest of your life.

Credit counselors are not at fault for being indifferent when you are knee deep in debt. They are not at fault looking out for the credit companies’ best interest.

This is only right, being that the bad credit counseling representatives work for the credit card companies!  Even though the counselor will be on the phone with you listening to the debtors problems and excused as to why they are having trouble making payments.

Bad credit counseling representatives will always remain loyal to their employers – the credit card companies.