Page 17 - Book1E

Many Americans still suffer financial hardships and do not agree with the experts that the Great Recession is over.
Consumer Credit Counseling
The natural follow-on to the high availability of credit and the misuse of such credit has been the advent of consumer credit counseling, which is typically defined as “the
process of educating consumers on how to
use credit appropriately to avoid incurring debts that cannot be repaid.”
Counseling services such as those offered by
Family Financial Education Foundation may
involve negotiating with creditors in order to
set up debt management plans designed to
help consumers repay their total balances due
over a workable timeframe. Such plans may offer reduced mini- mum monthly payments, reduced or waived fees, and reduced interest. Debt management plans, however, do not negotiate down the principal balance of a consumer’s debt, and any interest rate and/or fee reductions are strictly voluntary on the part of the creditor. Services may also include financial literacy education and budgeting advice.
In the United States, the first credit counseling agencies were created in 1951 when issuers of credit created The National Foundation for Credit Counseling, or NFCC. The goal of the NFCC was to promote financial literacy and help consumers avoid bankruptcy. In the late 1980s and early 1990s, the number of credit and debt counseling agencies in the U.S. increased signifi- cantly. An antitrust lawsuit was filed against the NFCC, arguing that the presence of creditors on the NFCC Board of Directors constituted monopolistic practices. As a result of this litigation, creditors agreed to fund non-NFCC member agencies as well.
A Brief History
The way to stop the financial joyriding is to arrest the chauffeur, not
the automobile. —Woodrow Wilson
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