AmeriCorp

AmeriCorp: An Insider's Stance on Credit Counseling Reform
SYOSSET , NY- December 16, 2003

AmeriCorp, concerned for the welfare of credit counseling consumers and reputable organizations, encourages reform of practices within the industry that would protect the good guys and the consumers.

AmeriCorp, as a provider of services to credit counseling organizations, is encouraged by reform of abuses committed by those who should be working for the social welfare. AmeriCorp believes the consumer should pay close attention to the advice provided in the following statements and that all nonprofit credit counseling organizations ought to take great pains to ensure that they indeed qualify for the exemptions they have received in the name of public charity. As costs of properly serving the debtor rises AmeriCorp also believes debt management firms that provide the educational and counseling services expected of them should be able to charge reasonable fees to offset well-known reductions in creditor contributions.

On October 14, 2003, the Internal Revenue Service teamed up with the Federal Trade Commission and they issued a joint alert to consumers in search of help from credit counseling organizations. Both government services agreed that a significant number of debt management programs have become more self-serving than beneficial to debtors. To address these concerns the IRS has focused more closely on agencies’ compliance with rules that qualify them for 501 (C) (3) exemptions; meanwhile, the FTC recently began exercising its mandate to protect consumers from unfair business practices in debt management programs.

AmeriCorp supports reform from governing bodies that investigate and gain an understanding of issues from all organizations involved in the industry. This includes creditors, consumers, knowledgeable third party organizations within the industry and credit counseling agencies. AmeriCorp supports a federal statute that would minimize the need for states to create their own individual statutes but that would also allow states to provide more strict regulations over the federal statute if they chose to do so.

Reform, to the point where fee reductions and restrictions are implemented, would create an industry of reduced or eliminated services to the consumer altogether. More and more everyday credit counseling agencies are closing their doors; unable to overcome the financial restrictions placed upon them. Is the lack of viable credit counseling companies good for consumers? Are regulations and restrictions within any industry, to the point of eliminated competition, good for the consumer?

Currently there is a great burden placed on credit counseling organizations to meet the service needs and guidelines of the credit card companies. The debtors, who have grown accustomed to the high tech services offered by their credit card companies and other financial institutions, demand the same type of service from credit counseling organizations. If consumers are willing to pay a reasonable fee for those services they should be allowed to make such a choice. Based in New York State, AmeriCorp is a strong supporter of the guidelines established by the New York State Banking Commission and of the regulations they impose on credit counseling organizations servicing consumers within the state of New York. These regulations include annual audited financial statements, proper disclosure related to credit counseling contracts, proper insurance bonding, and reasonable fees to clients. AmeriCorp is also a fervent supporter in strong internal accounting controls to protect client funds; a necessity most credit counseling organizations cannot guarantee without the use of outsourcing companies. Furthermore, AmeriCorp believes counselors should be certified in the field of credit counseling by a third party independent organization as part of a structured training process established by the credit counseling organization. Credit counseling organizations should have their training processes, as well as other processes within their organization, reviewed and certified by an independent third party organization similar to ISO or COA.

These guidelines provide a fair balance to the consumer and the organization. They ultimately provide resources to both, which enables the credit counseling organization to educate and assist the consumer while eliminating their debt and safeguarding the consumer from falling into debt again.


Close window	AmeriCorp: An Insider's Stance on Credit Counseling Reform SYOSSET , NY- December 16, 2003 AmeriCorp, concerned for the welfare of credit counseling consumers and reputable organizations, encourages reform of practices within the industry that would protect the good guys and the consumers. AmeriCorp, as a provider of services to credit counseling organizations, is encouraged by reform of abuses committed by those who should be working for the social welfare. AmeriCorp believes the consumer should pay close attention to the advice provided in the following statements and that all nonprofit credit counseling organizations ought to take great pains to ensure that they indeed qualify for the exemptions they have received in the name of public charity. As costs of properly serving the debtor rises AmeriCorp also believes debt management firms that provide the educational and counseling services expected of them should be able to charge reasonable fees to offset well-known reductions in creditor contributions. On October 14, 2003, the Internal Revenue Service teamed up with the Federal Trade Commission and they issued a joint alert to consumers in search of help from credit counseling organizations. Both government services agreed that a significant number of debt management programs have become more self-serving than beneficial to debtors. To address these concerns the IRS has focused more closely on agencies’ compliance with rules that qualify them for 501 (C) (3) exemptions; meanwhile, the FTC recently began exercising its mandate to protect consumers from unfair business practices in debt management programs. AmeriCorp supports reform from governing bodies that investigate and gain an understanding of issues from all organizations involved in the industry. This includes creditors, consumers, knowledgeable third party organizations within the industry and credit counseling agencies. AmeriCorp supports a federal statute that would minimize the need for states to create their own individual statutes but that would also allow states to provide more strict regulations over the federal statute if they chose to do so. Reform, to the point where fee reductions and restrictions are implemented, would create an industry of reduced or eliminated services to the consumer altogether. More and more everyday credit counseling agencies are closing their doors; unable to overcome the financial restrictions placed upon them. Is the lack of viable credit counseling companies good for consumers? Are regulations and restrictions within any industry, to the point of eliminated competition, good for the consumer? Currently there is a great burden placed on credit counseling organizations to meet the service needs and guidelines of the credit card companies. The debtors, who have grown accustomed to the high tech services offered by their credit card companies and other financial institutions, demand the same type of service from credit counseling organizations. If consumers are willing to pay a reasonable fee for those services they should be allowed to make such a choice. Based in New York State, AmeriCorp is a strong supporter of the guidelines established by the New York State Banking Commission and of the regulations they impose on credit counseling organizations servicing consumers within the state of New York. These regulations include annual audited financial statements, proper disclosure related to credit counseling contracts, proper insurance bonding, and reasonable fees to clients. AmeriCorp is also a fervent supporter in strong internal accounting controls to protect client funds; a necessity most credit counseling organizations cannot guarantee without the use of outsourcing companies. Furthermore, AmeriCorp believes counselors should be certified in the field of credit counseling by a third party independent organization as part of a structured training process established by the credit counseling organization. Credit counseling organizations should have their training processes, as well as other processes within their organization, reviewed and certified by an independent third party organization similar to ISO or COA. These guidelines provide a fair balance to the consumer and the organization. They ultimately provide resources to both, which enables the credit counseling organization to educate and assist the consumer while eliminating their debt and safeguarding the consumer from falling into debt again.