Christian Credit Counselor Tells Us to Go to CCCS or Debt Settlement Instead. – Shelly


“Dear Steve,

I lost my job in 2005 and for a year and a half, we lived on one income (with a little extra from my part time jobs) on a two income budget. We used credit cards to help us during this time. Although I am now working full time, all we manage to do is make minimum payments and are getting nowhere fast.

We cannot afford to make more than the minimums and are considering either doing a debt settlement or using a consumer credit counseling service. We have been advised by a Christian debt counselor that we know personally to do CCCS because of his convictions (not necessarily ours). I had been ready to do the debt settlement thing where you put aside money in escrow and stop paying the credit cards, etc. until I found out from him that the credit card companies can send you a 1099 and make you pay taxes on what you did not pay them–they can consider it money in your pocket I guess.

The Christian counselor made me feel like a horrible person for even considering the debt settlement; however, his warnings about them did make me reconsider. I have since gotten past the guilt and just want the quickest, cheapest, and best way out of this. We figure that with the 25%+ interest rates we are paying on most of our credit cards, the companies have collected enough to have paid off our original debt with them!

What do you think we ought to do? I have a couple of companies that have offered me a deal where for four years I pay about $200 (compared to about $750 in min. pymts. right now that is getting me nowhere) to settle my debt of about $17,000. What do you advise??? Thanks!


Dear Shelly,

You seem to have found one of the few really religious Christian credit counselors around. I suppose there are a number of ways of looking at your situation. On one hand you did enter into a promise to repay your lenders at a certain interest rate, which they could change, again according to your mutual contract. Apparently your Christian credit counselor feels you will go to Hell if you don’t repay all the money plus interest. Or if not Hell, then you need to go elsewhere for help.

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The Christian credit counselor is correct that you will get a 1099 for the forgiven debt and it will be treated as income. Additionally, the debt forgiven in a debt settlement will appear as a negative item on your credit report. From a purely religious point of view, so what. Those are simply the consequences of your actions.

The focus here seems to be the process on how to get out of debt rather than addressing the situation that has led you into trouble. That is what our attention needs to be on.

Biblical or logical, the path for you to get out of debt is not clear at all based on what you’ve shared. I’d really need to know what the issues were that led you to this juncture and what is preventing you from repaying your debt at this time.

Personally, I think as long as you shop for a way to get out of debt that is based primarily on how you want to feel and your terms that you are likely to be a candidate for getting scammed. No real solution let’s you walk away from debt without consequences or damage to your credit.

The deal you’ve been fed sure sounds like a monthly payment debt settlement approach. Not much good can come from this. During the time you are sending money to the debt settlement company you may get sued by your creditors. Also, most debt settlement companies will keep the first $4,000 to $5,000 of money you send as payment for their services rather than saved for settlements.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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