2008-11-28 / Columnists

Notes On Consumer Affairs

Commentary By Assemblywoman Audrey Pheffer

AUDREY PHEFFER AUDREY PHEFFER As predicted, the financial crisis on Wall Street has hit Main Street. An increasing number of New Yorkers are feeling the effects of the economic downturn and many now find themselves using loans and credit cards to make ends meet, while others are burdened by thousands of dollars of outstanding debt. If your debt load has become unmanageable and you are unable to negotiate a workable repayment plan with your creditors, you can turn to a credit counselor for assistance. If you are considering a credit counselor, it is important to keep the following tips from the New York State Banking Department and the New York State Attorney General in mind.

What is a credit counseling service? These services, also known as budget planning or debt management services, provide guidance to consumers with unmanageable debt. Credit counseling services may contact creditors on the consumer's behalf to attempt to arrange more favorable interest rates and lower fees. These services also work with the consumer to create workable debt consolidation and repayment plans. Some credit counseling services are offered for free, some charge a nominal fee, and others charge small monthly fees. Shop around to find the best deal and keep in mind that some non-profit community organizations, universities, housing authorities and credit unions offer free or low-cost counseling.

In recent years, several companies offering credit counseling services have been the subject of enforcement actions by the Federal Trade Commission and other enforcement agents for engaging in deceptive practices. As such, consumers need to be especially careful when choosing a service. Some counseling services claim to be not-for-profit, but this does not necessarily mean that they are legitimate. Be suspicious of services that charge fees based on the projected amount of debt reduction, claim they can help you pay off your debt for pennies on the dollar, or advertise that they can remove accurate negative information from your credit report. Credit counseling services are licensed and regulated by the Banking Department, so be sure that any service you are considering is properly licensed. For a list of services licensed by the Banking Department, point your web browser to: http://www.banking.state.ny.us/ sibudget.htm.

For more information about credit counseling, you may want to view the Banking Department's "Getting Out of Debt Safely" tip sheet posted on their website at: http://www.banking.- state.ny.us/brgods.htm. You may also want to consider visiting the Federal Trade Commission's fact sheet on credit counseling at: http://www.ftc.gov/- bcp/edu/pubs/consumer/credit/cre26.s htm.

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