If you are deep in debt, and plan on looking for a solution, be warned. Not only do you have to sort through all the competing companies clamoring to help, but you may also stumble into a “War of the Roses” of sorts among the competing factions in the debt relief industry.
You would think that debt relief companies would just want to help consumers find a solution to their financial problems, and some do, but there’s also a lot of animosity between the various debt relief solutions: bankruptcy attorneys who warn that debt settlement is just a scam; credit counselors who are reluctant to refer consumers to settlement or bankruptcy; debt settlement firms that sign up clients who should be talking to a bankruptcy attorney, or who might be successful in a credit counseling agencies’ Debt Management Program.
Last fall, Steve Rhode finally said “enough is enough” and brought together some of the top groups in the debt relief industry in for an open discussion. Many years ago, Steve established and ran a successful national credit counseling agency and, though he left that business some years ago, he has since become an outspoken critic of harmful practices in both the credit counseling and debt relief industries.
His November 13, 2010 “Rally in Raleigh” meeting led to the resurrection of the American Association of Credit Counselors, a group that had disbanded in the 1980s. The new AACC is more of an alliance than a trade association. The stated purpose is to: “…first assist consumers to receive ethical, open and transparent advice and assistance. Second, to work closely with regulators and legislators and provide information and data to honestly understand the debt relief world.”
“The whole focus of the group is to produce some parity in the debt relief industry at large,” says Rhode, “because the goal of the organization is to put consumers first.”
Because there is no staff to pay, the group doesn’t have to admit members just to collect dues. And because it’s not a lobbying organization, dues aren’t required to pay lobbyists.
Mike Croxson, president of Care One’s Services Inc., a founding member, explains it this way: “Trade groups in the debt relief industry — and I mean those representing non-profit and for profit organizations alike – have had a long and colorful history of failing to provide transparency to consumers, regulators and lawmakers. They have consistently done whatever they thought made sense for their dues paying members rather than for consumers. We at Care One were pleased to be asked to be a founding member of AACC because it is not a trade group… Our hope is that the effort helps reform the negative image that has been created by bad actors in the past.”
New Era Debt Solutions, a for-profit debt settlement firm, was formerly a member of an industry trade group called The Association for Settlement Companies (TASC), but parted ways with them. New Era co-founder Alex Viecco explains, “When the FTC passed the TSR ruling (debt relief rules), it was a great day for consumers. However, rather than to comply, many companies started to seek ways around the law and looking for ways to charge up-front fees. This was the catalyst for the coming together by a few companies that wanted to save this industry and continue to make this option available to consumers.”
Critics may still wonder if this isn’t just another case of the fox guarding the henhouse. It’s a fair question. And if I didn’t know Rhode and the members I’ve quoted so well, I would probably wonder the same thing. But they haven’t been afraid to speak up about problems in their industry before, so I can’t imagine that changing now.
Micheal Bovee, founder of Consumer Recovery Network, for example, says “I have long been critical of business practices and marketing claims used by debt relief service providers. My criticisms center on what I see as an industry guided more by profit than by a true commitment to deliver products and services that are of maximum service to individuals and families struggling financially, and who need a true partner in debt relief. The debt relief industry is in need of change and innovation. The AACC provides the opportunity to lead by example and accomplish much of what is needed.”
What this small group can accomplish remains to be seen, but the fact that everyone is in the same room talking together is a good sign. When consumers reach out for help with their debt, the last thing they need is to be caught in crossfire.