Family Credit Counseling: An Emerging Community Service
by Mayo H. Stiegler
The title of this article is taken from the recent report of the National Study on Family Credit Counseling on whose Working Committee I served as a representative of NLADA. The publication of its report comes at the end of two years’ study of existing non-profit financial counseling services and marks the beginning of an even greater task for implementing the report.
Since September, 1965, the twenty members of the Working Committee have been meeting at regular intervals, undertaking to sponsor a threefold study that would: (a) ascertain the best ways to aid families and individuals to extricate themselves from heavy indebtedness; (b) facilitate bringing together the viewpoints of various organizations and interests concerned with the responsible use of consumer credit; and (c) develop models for non-profit debt-adjustment and credit-counseling services.
The Working Committee represents the principal national organizations concerned with credit counseling because of their connections with the credit industry or because of their role in providing various community services. The actual survey was conducted by National Study Service on contract with the Family Service Association of America. Financing for the project was raised from the principal interested organization.
Throughout each phase of the study, the Working Committee met with the survey staff to receive status reports and to offer guidance. An exhaustive report was approved by the Working Committee in mid-1967, with a summary for general distribution published in the fall of 1967.
From the beginning, NLADA participated in and followed with interest the progress of the study. We expect to continue to play a role in implementing its recommendations.
In addition to the facts on credit use and number of bankruptcies outlined as background to the study, NLADA is aware of the high percentage of applicants who request free legal service and whose major problem arises from consumer credit or is related to some other economic pressure. In 1966, 23 per cent of clients seeking free legal assistance requested help on economic matters.
The major conclusion of the national study is that more non-profit financial counseling services are needed. Structured as non-profit corporations, these services ought to be staffed with trained professional people and ought to have the financial support of the community as a whole, rather than of the credit industry alone.
The report recognized the importance of developing a meaningful program of community education. Reasoned credit use and early consultation with the service as a preventive measure will be stressed.
The report’s final, and probably its most significant, recommendation is that a national organization “is necessary to provide strong leadership and service if effective and adequate local programs of family credit counseling are to be made generally available.” The principal functions of the proposed national organization are familiar to us– establishing minimum standards, field service, uniform statistics, research, educational materials, and a plan for accreditation.
The development of family financial counseling services parallels legal aid’s of not too many years ago. Because of our own recent experience with growing pains, we have an unusual opportunity, both on the national and local level, to lend our support in bringing into existence this companion to our community services.
Legal aid agencies, along with other community interest, have an important role to play in establishing and supervising family-credit counseling service. As non-profit agencies, these services would offer budget counseling as well as debt-adjustment plans for those who need them. A majority of those seeking financial counseling services will also be eligible for free legal services.
Legal aid offices can, for instance, analyze the debts of prospective pro-rate-plan clients from a legal point of view. They would advise as to which obligations, if any, should not be included in the plan, perhaps because of the running of the statue of limitations, fraud in the inception of the contract, or other similar defenses. There may also be some appropriate cases in which the attorney might advise against a debt-payment plan and recommend a bankruptcy or a Chapter XIII proceeding. Where financial counseling programs are already operating, legal aid attorneys have often participated and have served on the programs’ governing boards. NLADA urges further participation of legal aid societies as new financial-counseling programs get stared.
A copy of the Summary Report should now be in the hands of most civil offices. Others interested in obtaining copies can purchase them ($1.00 per copy) from the Family Service Association of America, 44 East 23rd Street, New York, N.Y. 10010.
Source: 1967, The Legal Aid and Brief Case, Vol. 26