OVERWHELMED
BY DEBT?
Consumer Credit Counseling Service helps consumers
manage their finances

By KAREN KOLIVOSKY
Photography JEFF TRUITT

With the holidays over, many shoppers are dreading the arrival of credit card bills bloated from overspending. Lori Wilson used to be one of them.

Today, she doesn’t buy anything unless she can pay cash for it. After recently paying off $10,000 in consumer debt in three years, Wilson, a 30-year-old licensed vocational nurse, has sworn off credit.

Her attitude toward money got a major adjustment when she enlisted Consumer Credit Counseling Service of Greater San Antonio in her struggle with debt. CCCSSA is a nonprofit agency that helps consumers manage their finances through free or low-cost classes, confidential counseling and debt repayment plans.

Between holiday bills and New Year’s resolutions to get finances under control, January is one of the agency’s busiest times.

“People come to us and say, ‘There’s got to be a better way. What can I do to get on top of the problem so that by this time next year, I’m in better shape?’” says George Merkle, the agency’s president and CEO.

CCCSSA clients include middle-aged couples, single moms, college kids, retirees and professionals with six-figure incomes. Some come in with debt resulting from simple overspending; budget counseling or the agency’s free money management class gets them on track. Others have overwhelming debt from medical bills, divorce, a death in the family, a job loss or a failed business. The common thread among CCCSSA clients is that all have reached the point where they need help to get their debt under control.

Wilson knows the feeling. When she joined the military and her paychecks began rolling in, she quickly developed a taste for the good life. She found it easy to use credit to pay for clothing, household items and splurges. “I was very compulsive,” she says. “I had to have everything at once. I wanted to have allthe nicest things.”

She opened up several credit cards and quickly maxed them all out. Making only minimum payments on high-interest accounts, Wilson found that the amount she owed never seemed to get smaller. She knew she
needed help when she realized that after a full year of making payments on a $500 stereo, she had managed to chip only $60 off the balance.

A friend told her about CCCSSA. She met with a credit counselor, who analyzed her income and expenses and discussed ways she could pay off all of her debt. Wilson decided to enroll in the agency’s debt management plan, a program in which CCCSSA helps clients repay lenders over three to five years.

The first step for Wilson was to cut up her credit cards. Next, a CCCSSA counselor negotiated with Wilson’s creditors and secured lower interest rates on her outstanding debts. Then the counselor determined what Wilson could afford to pay each month and developed a 36- month plan to repay her debt completely. Wilson gave CCCSSA a check for $300 a month, which the agency then distributed among her creditors.

With a plan and someone to help her get organized, Wilson’s attitude toward credit began to change. She even got a second job that allowed her to put extra money toward her debt. She sold many new clothes, unworn, with tags still on them, on E-bay.

“I used to go shopping with friends a lot, but now I just go and window shop,” she says. “I haven’t bought a nice piece of clothing since May.”

Wilson made her last debt payment in the spring of 2006. She still enjoys the good life — she took a trip to Thailand last year and splurged on a Plasma TV as a Christmas present for herself and her 9-year-old son. She even bought a house in December. The difference, she says, is that now when she wants something, she saves money and pays cash for it.

“I never use credit cards, and it feels wonderful,” she says. “Knowing that I’m not going to get a statement and think, ‘Uh oh.’ Now, once I’ve bought it, that’s it. I know I have the money for it. If I don’t, then I better not buy it.”

By the time clients like Wilson first walk into Norma McCarty’s office, they are often desperate, losing sleep over unpaid bills and creditor calls. McCarty, lead counselor at CCCSSA, can relate. Before becoming a certified credit counselor more than four years ago, she was a client herself.

McCarty was a stay-at-home mom in Colorado Springs, Colo., when her husband’s company changed ownership and their income immediately dropped by nearly $10,000 a year. With a lower income and the expenses of a new house, bills quickly got out of control.

The company referred them to the local CCCS office (CCCSSA has sister agencies throughout the country that are members of the same parent organization, the National Foundation for Credit Counseling). There, McCarty and her husband took a money management class and started a debt management plan that enabled them to pay off approximately $20,000 in four years.

Knowing exactly what her clients are going through, she’s passionate about helping them, whatever their situation. Some scenarios are common among the clients she sees. She’s counseled recent college graduates on their own for the first time, paying their own bills and coping with enormous amounts of debt.

With housing sales going strong, McCarty has seen an increase in the number of couples defaulting on their mortgages because they bought more house than they could afford or added mortgage payments to an already steep debt load.

She’s helped grandparents raising their grandchildren because the parents aren’t in the picture, trying to cover clothing and school costs with Social Security checks. Sometimes, helping clients like these means pulling out her referral list and finding churches that will help with groceries or encouraging them to find part-time work.

New retirees also turn to CCCSSA when they celebrate their retirement a little too extravagantly and find they can’t survive on their retirement income. ”When people first retire, the first year they seem to go a little crazy on the spending,” McCarty says. “They think retirement means ‘I can go out and play golf every day.’ Then they realize they spent $12,000 on golf balls and being out on the golf course.”

“In this business a counselor has to be so many things,” McCarty says. “You have to know how you’re going to help the client deal with the situation, where they need to go, where to refer them to, even encourage them. They’re so down. They’re so depressed, you’ve got to build them up and encourage them to go out
and do something.”

CCCSSA provides confidential counseling to roughly 6,000 people each year — in person, by phone and online. The agency teaches classes to nearly 3,500 more annually. Sometimes helping clients is a matter of reviewing their income and their bills and helping them create a budget. Other times, clients need CCCSSA to intervene and work with creditors on repayment through a debt management plan.

About 28 percent of clients enroll in a debt management plan; approximately 700 clients finished plans in 2006. Debt management plans at CCCSSA require a $20 start-up fee and a $25 monthly maintenance fee for the life of the payment plan.

CCCSSA offers educational classes on subjects including the basics of money management (a free class), credit and credit reports and preventing identity theft. The agency is also certified to offer pre-filing counseling for those considering bankruptcy, along with housing services such as reverse mortgage counseling.

The agency helps clients from its headquarters in North Central San Antonio and two South Side locations, along with weekly visits to military bases, including Fort Sam Houston, Lackland and Randolph Air Force Bases.

CCCSSA also serves communities throughout South and Central Texas, including Austin, San Marcos, Kerrville, Seguin, Del Rio and Laredo. An 11-member board of directors, all from South Texas, governs the agency, which is funded mainly through grants, client fees and creditor contributions.

CCCSSA is not a credit repair or debt settlement firm — the kind that often advertises on the radio or late night TV promising painless solutions to financial nightmares. In fact, with a tight budget typical of a nonprofit agency, CCCSSA hardly advertises at all. Many clients are referred to the agency from banks or other lenders when they fall behind on payments.

Another major source of referrals is friends or family members who have benefited from CCCSSA programs. Watching her clients’ lives transformed as they become free of debt is one of the best parts of her job, McCarty says.

“The best thing is they finally figure out who they are and what they’re capable of doing, and it feels good to them because they can help somebody else,” McCarty says. “Everything they’ve learned from us they turn around and teach their children or a relative or a friend.”

For more information on CCCSSA, please visit www.CCCSSA.org or call (210) 979-4300.