A reader wanted me to watch a past video, that I’ve embedded below. The reader wanted to know if Clearpoint Credit Counseling Solutions was involved in debt settlement.
Clearpoint is an NFCC and AICCCA member agency (source) so the claim they had been involved in debt settlement sounded surprising to me. Typically non-profit credit counseling agencies are scared to touch debt settlement for fear of losing their creditor funding.
Maybe MSNBC was confused when they shot the piece. Here is what they say:
She had $5,000 in credit card debt, including a $1,700 balance on her Visa card, but with the help of a non-profit credit counseling service, (the consumer) was able to convince Visa Providian to settle for just $900.
And then surprisingly Jean Chatzky, who was and maybe still is a board member of the National Foundation for Credit Counseling (NFCC) agrees that debt settlement is a valid option. She says, creditors “are willing to deal” if you’ve fallen behind.
So why is credit counseling so resistant to settling debts if one of their own board members says creditors are willing to deal?

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Unable to reply in the thread so starting a new one.
It is a great media story, just possibly misleading if someone mistakenly thinks that ClearPoint was directly involved with the settlement portion of her story. I am not trying to “throw the baby out with the bathwater” here.
I think the confusion may be with the term “debt settlement” and lumping self-admininstered settlements and debt settlement companies together. Self-administered settlement in the proper circumstance is quite different than hiring a debt settlement company.
And yes, there are certainly situations where we refer the client to contact the creditor directly, or call them back again, or to accept an in-house program instead of DMP if they were offered a better APR.
Every debtors situation is different and that seriously impacts what we discuss during counseling. There is no one-size-fits-all answer and that is reflected in the action plans of the clients we counsel and in the conversations we have with consumers we educate.
Much clearer. Thank you.
I’m not insinuating that ClearPoint is a bad actor or a for-profit outfit. The story was remarkable and refreshing to see a credit counseling agency embracing debt settlement on behalf of a consumer.
What’s wrong with ClearPoint professionally helping the consumer settle the debt as a professional and experienced debt expert just as you would professionally intervene with the creditor on a DMP?
Who’s afraid of the big bad wolf…. you’re all a bunch of sell outs!
i wouldnt go as far as to call the credit counselors a “bunch of sell outs”, it is a balancing act If your running a very low consumer fee model, support from creditor funding is needed to provide the quality of service needed to give consumers a chance to succeed on these plans. Myself and my staff have absolutely the consumers best interest in mind and we do all we can to provide sound advice for all kinds of financial situations not just a debt management plan. That may sound fluffy to you but its the truth. I wish i was able to provide a less the full balance program but at this time offering such a solution could jeopordize our ability to serve the needs of the existing clients we help every day. I will say that i have got to know many of the good debt settlers over the past 12-18 months and before i met some of them my belief was that they were all bad and it was hard not to have that perception giving that the vast majority of all the debt settlement plans entered into for a few years were all of the greedy, bad players. Same thing that happened in the credit counseling space in the early 2000’s. hopefully as this industry “grows up” and continues to evolve everyone will have there eye on the ball and shift to making sure that consumers come first.
Thank you. A very open and honest comment that explains the handcuffs credit counselors face.
Awesome Christopher!! This is the kind of honest dialog that’s going to help bring those walls down. I think the education that you, Clearpoint and the rest of the non profits provide is invaluable but at the end of the day there are plenty of consumers who cannot afford the payments in a DMP and not everyone is skilled in negotiating to suggest a diy approach and chalk it up as education. If negotiating were that easy there would be no collection industry as everyone would just settle with all their creditors. There’s a learning curve in knowing the settlement policies of every creditor and lets be honest, collection tactics often scare the heck out of most consumers. Let me ask you this though, would banks pull fair share if they found out you guys were referring consumers to debt settlement? To truly act in the consumers best interest, non profits and debt settlement companies need to work together.
Awesome Christopher!! This is the kind of honest dialog that’s going to help bring those walls down. I think the education that you, Clearpoint and the rest of the non profits provide is invaluable but at the end of the day there are plenty of consumers who cannot afford the payments in a DMP and not everyone is skilled in negotiating to suggest a diy approach and chalk it up as education. If negotiating were that easy there would be no collection industry as everyone would just settle with all their creditors. There’s a learning curve in knowing the settlement policies of every creditor and lets be honest, collection tactics often scare the heck out of most consumers. Let me ask you this though, would banks pull fair share if they found out you guys were referring consumers to debt settlement? To truly act in the consumers best interest, non profits and debt settlement companies need to work together.
hi angelo, its hard to say what the creditors would do if we had a select list of good providers for consumers to contact. I have made the case that at the least we should be able to do this but have had no success getting confirmation. for now what we do is let consumers know what to look for and what to watch out for when contacting a debt settler.
hi angelo, its hard to say what the creditors would do if we had a select list of good providers for consumers to contact. I have made the case that at the least we should be able to do this but have had no success getting confirmation. for now what we do is let consumers know what to look for and what to watch out for when contacting a debt settler.
The client of ClearPoint in this older interview completed a settlement on her Visa with some input from her credit counselor on how settlements work, but ClearPoint was in no way involved with the negotiation of that settlement. The verbiage in the interview is misleading. The client opted to settle that debt and put the remaining debts into a CCCS debt management program with ClearPoint for full repayment at lower interest rates. ClearPoints policy on debt settlement, which is strictly adhered to, is copied verbatim below:
ClearPoint does not endorse debt settlement as an option to
repay debts. However, if you elect debt settlement on one or more of your
obligations, please be aware of the importance of obtaining written
acknowledgement of all agreements and the possible tax and credit standing issues
that may result. It is possible
that you may be responsible for taxes on the settled amount and/or you may
experience a negative impact on your credit rating.Thomas NitzscheMedia Relations Coordinator – HeartlandClearPoint Credit Counseling Solutions(312)669-4979www.clearpointccs.org
OK, I’ve got to ask. Are you saying that even though there are times that settling a debt might be appropriate and the best option that ClearPoint is willfully and intentionally not educating the consumer about this?
ClearPoints mission statement is “Consumer Health Through Financial Education”. We certainly educate consumers about the differences between settlement and counseling and advise them of the possible consequences above if they are considering settlement. In a situation where a settlement might be a viable option for them we would simply educate and leave it up to the client to decide, as in any other case. The verbiage above is simply to make it clear that ClearPoint does not get directly involved in negotiating settlements, as the MSNBC report led viewers to believe.
If you are educating about the possible consequences, are you also educating about the possible benefits as well when it is appropriate?
Can you help me understand why you would want to distance yourself from a viable debt relief option that is appropriate in some situations? I don’t understand the logic of that if you are acting in the best interest of the consumer.
When the piece came out did you issue a retraction or public statement that it was wrong? Why now?
ClearPoint certainly educates about all options based on the type and status of the debt and where the client is financially after a holistic review of income, assets, budget and debt. If an account has charged off and the client is receiving settlement offers we certainly want to talk about how that process works and what to expect if considering it.
I have many clients who have opted to settle their collection debt on their own after being educated that they do not have to hire a company to do this for them. Our aversion is to debt settlement companies, not settlement itself in the appropriate situation.
The MSNBC piece was unfortunately worded from our perspective. We would have preferred the settlement not be so closely aligned with talking about ClearPoint and her debt management program because they are totally separate and ClearPoint did not negotiate a settlement on her behalf as the piece could lead viewers to believe. Nor would ClearPoint want to be mistaken for a for-profit debt settlement company. ClearPoint simply educated her as to how settlements work and what to expect. As your quote indicated, it was “the consumer” who convinced Providian to settle, not ClearPoint, so no retraction necessary but too close for comfort.
Well congratulations then on embracing debt settlement and educating consumers on how to settle their debt.
If you instruct people to settle their debts directly with their creditors instead of getting your professional assistance, do you also instruct them to enter creditor internal hardship programs directly rather than use the professional help of a debt management plan?
Do you tell them that the negative impact on their credit is certainly near the same hit as enrolling in a CCC program will be- about 30%? Do you further explain that the sooner they are out of debt, the sooner they can rebuild their credit- If worked at, that it can take as little as one year, which means their credit in settlement could be “normal” again before they are even out of a typical CCC plan? Do you tell them that only 25% of consumers that enroll into CCC plans complete them? In settlement, on a performance based plan the completion rate is documented at closer to 70%? And, lastly, that if they qualify for settlement that they are VERY unlikely to owe the tax- which by the way is generally only sent to the IRS by the original creditor, not the collection companies?
I have no quarell with your company but half truths are NOT truths!
Thanks for the update Thomas.
It is unfortunate that ClearPoint does not recognize the legitimacy of a consumers ability to negotiate reduced balance settlements on unpaid debts.
It is equally, and perhaps less fortunate, that your policy statement on the matter is reduced to soundbites meant to deter. I look forward to a day when nonprofit CCA’s embrace the educational mission that embodies the tax status privilege that accompanies it.
Best to you and yours this holiday season.
Well said Michael
We could bring this discussion back to the “fiduciary responsibility” the CCA’s have to learn “all” there is to know about the debt settlement process and then advising their client on all debt relief options. Instead of giving a biased (negative) opinion based on limited knowledge on the DS process to their client.
With an excellent 30+ year reputation and as the only national CCCS agency with system-wide A+ Better Business Bureau accreditation, you can see why ClearPoint would want to distance themselves from the recent proliferation of for-profit debt settlement companies who often do not explain how they work and often disappear before completing the services they promise to provide. We are on-track to complete well over 1,000 free financial education presentations this year to over 20,000 attendees in addition to the thousands of one-on-one personal counseling sessions we provide free of charge to consumers in communities across the country. Consumers have choices when dealing with their personal finances and debt and our mission is to educate consumers to make the best choices for themselves based on their unique situations.
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Excellent.
But how many of those workshops were about teaching consumers how to settle their own debt when it was appropriate to do so?
There is a workshop specifically on options in paying down debt where we talk about debt settlement, the dangers of settlement companies, and how it can be done on your own directly with the creditor.
http://www.clearpointcreditcounselingsolutions.org/paying-down-debt
It also comes up many times in Q/A sessions and when counseling, and the most thankful feedback I receive are from consumers who had almost signed up with a debt settlement company who turned out to have an “F” BBB rating or pending attorney general action against them and instead went with CCCS or managed the debt on their own either through in-house creditor hardship programs or self-administering settlements.
I’m not trying to be difficult here but you are sending conflicting messages.
The Today show story was a positive message about how you helped the consumer find a solution and settle her debt, which was a good thing to help her with in her situation. It is a story which you now appear to be trying to distance yourself from and now say was wrong.
Additionally, you appear to be saying globally disparaging things about debt settlement but your own course calls it one of the “popular methods of debt reduction.”
And according to your statements you appear to be actively teaching consumers about how to settle their own debt when you say you instruct people “how it can be done on your own directly with the creditor.”
If you instruct people to settle their debts directly with their creditors instead of getting your professional assistance, do you also instruct them to enter creditor internal hardship programs directly rather than use the professional help of a debt management plan?
You can see why I’m still struggling with your messages.
What am I missing?
Thomas are your consultants educated and up to date on the debt settlement process to properly advise your clients? The DS industry you are referring to has gone through significant changes. A significant number of current DS consultants are now able to discuss the Credit Counseling/Debt Management option with their client and I do not believe this is true for CCCS consultants who are sheltered by the agencies from learning more about this important debt relief option.
Debt settlement itself is not what harmed consumers, it was those who charged upfront fees that harmed consumers (And now it’s the attorney model but that’s another topic. There have been plenty of debt settlement companies who charged at settlement with the data to back their claims long before the FTC stepped in and banned upfront fees.
The same argument can be made about the proliferation of non profits who enrolled everyone into a DMP regardless of their financial situation. I’ve seen non profits put accounts that have been charged off and sold to debt buyers into a DMP knowing full well that agency settles for 30% just to justify charge a monthly fee for dispersing funds on a 100% payoff. Unfortunately you will find this in every industry so it’s important for consumers to do their homework, that’s why they depend on the non profits, to educate them on their choices and options. You can understand the frustration when off the record, you all acknowledge that the banks that are forcing you to take this position but yet on these public forums you all seem to take the same anti-settlement stance. I’m hoping there will be a day when non profits and for profits can work together instead of beating each other up for market share. There’s a segment of consumers who are not able to afford the dmp payments but do not qualify or do simply want to avoid bankruptcy. If the purpose, goal and mission is to educate the consumer then why not educate them on settlement? Send them my way, I’ll send a donation for your educational services 😉
hi steve, i think this news story is a couple years old and if so its prior to the more restrictive comments put forward by some creditors. Since this report the creditor community embraced the call to action plans giving credit counselors the opportunity to offer lower payments if needed only to see massive abuse by some of the credit counselors offering the lower payments to everyone they counseled. Those events have led to the creditors being much more skeptical about giving additional tools to credit counselors to offer consumers without there being a true needs based process in place. Unfortunately to many credit counseling agencies still incentivize their counselors on enrollments one way or another which leads to an obvious conflict when trying to “sell” a plan to a consumer. offer the best deal possible to make the sale mentality. I agree with mike in the fact that less then full balance plans need to be available in credit counselors toolbox but unfortunately its going to take time before we see that.
For the record cambridge does not offer any type of less then full balance programs or any form of debt settlement at this time nor does cambridge in any way incentivize its counselors on enrollments. christopher
Sounds like the BP oil spill cover up. How can you sit here and defend the banks by pointing blame to CCC companies? The only reason you and every other non profit is not doing settlement is because the banks will cut off your fair share.
Tisk Tisk….Im afraid you are all just a slave to the banks Christopher and unfortunately as a result, consumers who cannot afford the CCC payments are not given the option or even referred to a reputable debt settlement company. So for fear of losing fair share, you have now created a scenario where those consumers only option is bankruptcy!?!?!? I’m sorry but I thought non profits were supposed to act in the best interest of the consumer…..when will you guys stand up to the banks?
Chris – Thanks for the clarity and insight. I could tell by Jean’s comment in the interview that it was from months before the CARD Act was fully implemented.
It is the oddest balancing act CCA’s engage in when attempting to serve the dual role they are boxed into. The scale weighs too heavily to one side which creates multiple issues for all involved.
Cheers to a brighter more effective debt relief services future.
Chris – Thanks for the clarity and insight. I could tell by Jean’s comment in the interview that it was from months before the CARD Act was fully implemented.
It is the oddest balancing act CCA’s engage in when attempting to serve the dual role they are boxed into. The scale weighs too heavily to one side which creates multiple issues for all involved.
Cheers to a brighter more effective debt relief services future.
hi steve, i think this news story is a couple years old and if so its prior to the more restrictive comments put forward by some creditors. Since this report the creditor community embraced the call to action plans giving credit counselors the opportunity to offer lower payments if needed only to see massive abuse by some of the credit counselors offering the lower payments to everyone they counseled. Those events have led to the creditors being much more skeptical about giving additional tools to credit counselors to offer consumers without there being a true needs based process in place. Unfortunately to many credit counseling agencies still incentivize their counselors on enrollments one way or another which leads to an obvious conflict when trying to “sell” a plan to a consumer. offer the best deal possible to make the sale mentality. I agree with mike in the fact that less then full balance plans need to be available in credit counselors toolbox but unfortunately its going to take time before we see that.
For the record cambridge does not offer any type of less then full balance programs or any form of debt settlement at this time nor does cambridge in any way incentivize its counselors on enrollments. christopher
I really enjoyed Chatzky’s comments.
I also tip my hat to Clear Point credit counseling for getting balance reduction benefits for their customer. I hope they are still providing that kind of consumer-centric solution. If they are, I would like to know about it and will start to promote them as a good resource for consumers.