cpf_finfit_02h by sushaifj

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									                            The Credit Union,
                            CCCS Partnership:
                            A Natural Fit        by Judy Dahl



 Credit union members from all walks of life can find themselves in financial
 difficulties, whether being uncertain about how to purchase a home, being
 denied a loan, or accumulating serious levels of debt. More credit unions are
 turning to financial literacy education and counseling to help these members,
 and many are choosing to work through the nonprofit National Foundation
 for Credit Counseling’s (NFCC) network of 115 nonprofit member agencies,
 many of which are known throughout the country as the Consumer Credit
 Counseling Service (CCCS).
   The main thing the NFCC does       business,” he adds, “but the Senate   tions, Momentum CCCS, Indi-
is to assure quality. All NFCC        committee investigating this indus-   anapolis. “It sets out a code of
members, including CCCS mem-          try recently designated the NFCC      ethics, and requires all counselors
bers, are accredited by the Council   as the prototype of what a counsel-   to be certified.”
on Accreditation, an independent      ing agency should be.”                   The NFCC also provides a
                    om
third party, says T Hufford,             “The NFCC sets the standards       voice for local members on
president, CCCS of Northwestern       all member agencies have to adhere    Capitol Hill, and provides
Indiana, Fort Wayne, Ind.             to,” says Melinda Wright, director    guidance to members on rules
   “There are a lot of rats in this   of education & community rela-        and regulations.


18A   | FINANCIAL FITNESS
“ ”
   The Senate committee investigating this industry recently designated
   the NFCC as the prototype of what a counseling agency should be.
Why CCCS?                               ucation. CCCS has a whole sup-                                   and reduced interest-fee waivers,
   The partnership between credit       port system that counselors can                                  for example, to make their payment
unions and CCCS is informal, with       turn to if they’re unsure of how to                              plans work, explains Fleming.
no contracts required, and counsel-     deal with a member.”                                             “They’ll set up a budget for people
ing is free to members. When                                                                             and help them learn from the situa-
members pay off their debts under       An inclusive                                                     tion, so they’ll avoid similar prob-
a CCCS debt-management pro-             debt-management package                                          lems in the future.”
gram, the creditors pay CCCS a             “We look to the local CCCS to                                    He recalls one couple in their
portion of the payments to cover        do what we can’t as an individual                                30s with three children. “He’d been
operating costs.                        creditor, to work with our mem-                                  downsized from his job and found
   “We provide community educa-         bers who may be head-over-heels                                  a lower-paying one,” says Fleming.
tion programs, training for credit      in debt,” says Dave Fleming, CEO,                                “They’d bought a small house, but
union employees on budgeting and        Philips Electronics Federal Credit                               couldn’t support the debt.”
managing credit, and also on how        Union, Fort Wayne, Ind. “We have                                    The couple entered credit coun-
our agency works and when to re-        40 branches (nationwide), many of                                seling at CCCS. “He brought his
fer people to us,” says Wright.         which are very small. It’s hard to                               paycheck there every week, and sat
   Heritage Federal Credit Union,       develop counseling expertise in a                                down and wrote checks to pay all
Evansville, Ind., has offered finan-    branch that may have two people,                                 his creditors,” says Fleming. “Slow-
cial counseling through CCCS for        and to have the time to do it.                                   ly but surely they learned to live
more than 25 years. Karen Garrett,         After a counseling session, CCCS                              on this reduced amount of money
collections team leader, and two        will come up with an individualized                              and, after about two years, they’d
other collectors identify chronically   debt-management plan and work                                    paid off a lot of the debt and he
delinquent members when working         with creditors for lower payments                                had moved up the ladder at his
their collections queues. “We try to
get the member to come in for a
meeting and find out where the
problem lies,” she says. “If appro-
                                                                                 Impact of Credit Counseling
priate, we refer them to CCCS.”                                                              (Three Years Later)
   CCCS counselors work with the
members, setting up formal debt-                                          $5,000
management plans if necessary. “It’s
a good program. The CCCS is                                                     0
                                                $ Change in total debt




very good at working with mem-
bers’ creditors because they’ve                                            -5,000
worked with them for so long,”
says Garrett. “Many of the big                                            -10,000
credit card companies will even
work with them.”
                                                                          -15,000
   “With CCCS, you have quali-                                            -20,000
fied, certified counselors,” adds
Tammy Jones, vice president of op-                                        -25,000
erations and chief operating officer,
Credit Union of Ohio, Columbus,                                          -$30,000
Ohio. “We could hire our own
counselor, but our CCCS coun-                                            Source: National Foundation for Credit Counseling (NFCC) and the
selor receives ongoing education
                                                                         Credit Research Center's "The Impact of Credit Counseling on
and stays current on the latest in-
                                                                         Subsequent Borrower Credit Usage & Payment Behavior"
formation. It would be costly for us
to pay for someone to get that ed-                                       To contact the NFCC call: 800-388-2227, or visit nfcc.org


                                                                                                                                      FINANCIAL FITNESS   | 19A
new employer.”                         and were overwhelmed,” he says.        potential for having a CCCS coun-
   The family was able to buy a        “They were just barely keeping up.     selor on-site full time.
newer home with an attractive          Our staff counselor met with them         “Jim does proactive counseling;
mortgage. “You could see the           over a five-year period and largely    some members ask for advice on
smiles on their faces as they told     got them out of credit card debt.”     potential purchases, or want to pay
the story,” says Fleming.                 “When members sign up with          off debt but aren’t really having
   Professional Federal Credit         CCCS, they agree not to get fur-       problems,” she says. The credit
Union, Fort Wayne, Ind., does          ther into debt. If they have to        union and CCCS do educational
have a full-time counselor on staff,   make a big purchase because some-      seminars such as first-time home
but also refers members to CCCS.       thing breaks, they have to contact     buyer sessions, how to understand
“Our loan or collections officers      CCCS first,” says Garrett.             your credit score, and how to pre-
refer members with high debt lev-      “They’re very appreciative; if they    pare a budget.
els or chronic delinquency to our      end up filing bankruptcy, they reaf-      “We also have plans to conduct
counselor, who does a financial as-    firm their debt with us. They want     youth educational sessions such as
sessment and decides where it          to pay us because we’ve helped         how to buy a car, how to manage
should go from there,” says Greg       them—they aren’t as likely to do       money, credit card pitfalls—our
Troutner, executive vice president     that with creditors who have           goal is to draw members in before
of operations.                         hounded them.”                         they get into trouble,” adds Jones.
   “Sometimes we can restructure                                              “Nonmembers can attend the ses-
the debt, and consolidate their                                               sions sponsored by the Central
credit union loans with the goal of    Sharing resources                      Ohio Chapter of Credit Unions in
improving cash flow. Or we’ll help        “We share a CCCS representa-        partnership with CCCS. They
them put together a budget they        tive with another credit union be-     teach attendees about credit unions
can live with. If our counselor        cause we didn’t think we had           and our products at the end of the
decides members need a debt-           enough demand for a full-time          sessions. It’s a way to build rela-
management plan, we refer them         counselor,” says Jones. “Jim, our      tionships.”
to CCCS,” Troutner continues.          counselor, is at the other credit
   “I remember one couple, long-       union’s office one week and ours
time members nearing retire-           the next week. Our members can         Separating credit unions
ment—with good jobs—who had            go to either credit union’s office.”   from banks
over $125,000 in credit card debt      As the program grows, Jones sees a        When members do get into
                                                                              trouble, Jones’ staff members refer
                                                                              them to CCCS. “In the two-plus
                “My Household Could Greatly Benefit                           years he’s been here, Jim has talked
                                                                              to about 350 members and about
                 from Professional Financial Advice”                          the same number at our partner
                                               Disagree                       credit union,” she says.
                            Neutral              19%                             When one member exceeded his
                             40%                                              credit card limit, his credit card
                                                                              company raised his interest rate to
                                                                              29.99% and began charging a $39
                                                                              late charge and a $39 overlimit fee
                                                          Strongly            per month. He fell behind on his
                                                           agree              mortgage and car payments and,
                                                            11%               although he believed he’d have to
                                                                              file bankruptcy, he approached the
                                                                              credit union for help. “CCCS en-
                                                                              rolled him in a debt-management
                                                                              program that reduced his interest
                                                  Somewhat                    to 5.9% and stopped the penalty
                                                    agree                     fees,” says Jones. “Jim also delayed
                                                     30%                      the start of his program to allow
                                                                              him to get his mortgage and car
                                                                              brought current.
                                                                                 “We’ve had about 40 people in
                                                                              debt management, and some are


20A   | FINANCIAL FITNESS
just now completing it,” she con-
tinues. “It was exciting that they’d         Resources
commit to the program, and even
                                               • “Credit Counselors Help You Balance the Bills” statement stuffer
more exciting that they’re com-
pleting it.                                  encourages members to seek professional help in getting a handle on debt.
   “Those are the people who are             Also tells members what to look for and what questions to ask when selecting
coming back to the credit union              a credit counselor (Stock No. 27026-SUP).
and saying, ‘Now I want to buy                 • “Payday Loans: The Hard Truth About Some
my first home,’ ’’ says Jones.               Easy Money” statement stuffer educates consumers about
“They come back to us because                the shocking interest rates charged by check-cashing outlets
we helped them. Even if the loan’s           and steers them toward credit unions (Stock No. 22648-SUP).
a little questionable, we take into            • “Budget Blueprint: Design Your Own Spending
consideration that they completed            Plan” statement stuffer helps members establish a budget.
the program and we’re more likely            An extended table covers categories from shelter to install-
to grant the loan.”                          ment payments. Tips motivate members to start and stick to
   The credit union, CCCS part-              a budget (Stock No. 20057-SUP).
nership is a good fit. “Both parties
                                               • “Budget Blueprint Interactive: Plan. Track.
care about our members’ financial
                                             Succeed.” This disk will make the process of developing
well-being,” says Jones. “It’s some-
thing that separates us from banks.          a personal spending plan easy for credit union members.
A lot of members tell Jim they               Enter your income and expenses, set financial goals, and
came to us because other financial           generate reports that help you track spending and identify
institutions don’t offer counseling.” s      spending leaks. Totals calculate automatically with Excel
                                             spreadsheets (Stock No. 26334-SUP).
                                               To order products call 800-356-8010, ext. 4157; or visit buy.cuna.org.




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                                                                                            21497-SUP
                                                                                                               25740-SUP




     |                                                                                                        FINANCIAL FITNESS   | 21A

								
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