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Consumers Need Credit Counselors to Get Out of Debt

A dancer who couldn't feed her tiger. A millionaire who was obsessed with spending his money. A man who wanted to jump off a bridge. A disabled person who just lost her job.

In her first year as a credit counselor, Terry Sharp thinks she's heard it all. Her job is to help people solve their financial problems. But more importantly, she says, she counsels people.

And since more people are in a financial rut these days, the field has nowhere to go but up.

"The way the world is going, opportunities in this field are going to be astronomical," says Sharp.

Kathleen McNally is vice-president for national financial literacy at the National Foundation for Credit Counseling (NFCC). She says that the downturn in the hospitality and travel industries has led to more credit problems in the public.

"That has had a tremendous impact on those who were gainfully employed and are now in dire straits," she says.

The popularity of credit has also put a demand on the profession, says McNally.

"We are, in many ways, an instant-gratification nation," says McNally. "We use credit for things now that before we would just use cash." Purchases range from coffee and a doughnut to college tuition, she says.

There has also been another change, she adds. "It was a lot harder to get credit 30 years ago than it is now."

Credit is becoming a huge problem for college students, says Matt Reading. He is a chief investment officer in Texas.

Credit card applications can usually be found anywhere on campus, he says. And many students confuse spending money on a credit card with actually having the money to pay for it. "As a result, they are poor for the rest of their lives based on decisions they made in college."

Andrew Holt is the executive director of Credit Counseling London. He says that young people tend to spend a lot more than they once did. "Young people today have grown up in a society where credit is a way of life."

McNally says that credit counselors are visiting campuses to talk to students about good credit.

She also says that bad credit can affect anyone, and employers are starting to recognize this. In fact, many businesses are inviting credit counselors to speak to their staff about how to budget and keep track of their finances, she says.

"More employers are realizing that if people have financial problems, they can't be as effective on the job."

According to Debt Solutions of America, the average client is 37 years old. Fifty-two percent are single, and 48 percent married. Their average monthly net income is $2,032, while their average total outstanding debt is $20,097.

Credit counseling has changed a lot over the years, says McNally. "To a certain extent, it's almost a multimedia range of opportunities out there."

Before, she says, meetings between a person and a credit counselor were face to face. Now a lot of counseling is done over the phone or the Internet.

She thinks this is where the industry is heading. "We're being more responsive to consumers and their needs. For some people, telephone counseling can be very helpful."

But since credit problems do not have a quick fix, McNally prefers face-to-face interaction. And it shows. The average visit with a client at the NFCC is 71 minutes, she says.

"First, we help them figure out how they got into this financial challenge. Then we discuss how they can get out of it. And finally, [we talk about] how to change their spending patterns so that history doesn't repeat itself."

Credit counselors try to get people out of debt and find out what caused the debt in the first place. "Debt is usually the symptom of a problem," says Reading.

He feels that there is a great need for credit counselors in today's society. But he says unfortunately, there's no money in it. "You're working with folks who don't have a lot of money."

He started as a credit counselor about 16 years ago. "I had a hard time making money," he says. So he became a financial planner because the pay was better.

In order to make money in the field, Holt suggests working for nonprofit agencies, as they sometimes receive government support. "When you're working with clients who have financial problems, the last thing they need is another huge fee," he says.

"It's not like being a lawyer or accountant where you can expect to base your income on [client] fees."

This limits the number of job openings, he says. "The number of positions available really depends on the funding available. There really is not as much funding as we would like. We desperately need to hire another full-time counselor, but we simply don't have the budget to do that."

His agency is not alone, he says. "There are quite a few agencies [that] could use another staff person, but just can't afford to hire one."

So what does it take to be a credit counselor?

A background in financial planning is important, of course. But the best credit counselors are those who are good at working with people, says Reading. "It's really social work."

Post-secondary schooling is not necessary to enter the profession. But that doesn't mean it is an easy field to get into. Counselors with the NFCC, for example, must be certified and write a rigorous exam. Plus, their counseling is monitored.

Holt says a credit counselor really should have a university degree, particularly in a related field, such as commerce, economics or social work.

"Because there is really no program for credit counseling in university, there is nothing that specifically prepares you for the field." A lot of credit counselors are former bankers or sociologists, he says.

That's the case with Sharp. She spent 33 years as a banker before her job ended through downsizing. While her job is demanding, she doesn't regret her decision to become a credit counselor. "I like pretty much everything about what I do," she says.

Holt agrees. "It has its frustrations, but it certainly has its rewards too," he says. "When someone comes in and doesn't know what to do, it's nice to be able to sit down with them, go over things and work with them for a long-term plan."

"It's really nice to see the look on people's faces when they come in to make their last payment. They realize -- sometimes with surprise -- that they have avoided bankruptcy. And they walk out of here debt-free."


American Consumer Credit Counseling
A nonprofit organization dedicated to helping people regain control of their personal finances

How Consumer Credit Counseling Works
Learn more about the process

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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.