The ClearPoint Credit Counseling Approach to Debt Management
In a nutshell: ClearPoint Credit Counseling Solutions is a nonprofit organization with a 50-year legacy that helps clients develop personalized solutions to their financial problems and debt management plans with their creditors to improve their situation.
Debt is a terrifying nightmare for millions of Americans. Harassing debt collectors, wage garnishments and the general anxiety of unsecured debt leave many feeling helpless. When you run out of money and your credit score hits rock bottom, what can you do?
Luckily a unique set of individuals known as certified credit counselors make it their goal to help people turn their finances around.
Atlanta-based nonprofit ClearPoint Credit Counseling Solutions offers one of the largest and most comprehensive networks of debt counselors in the nation, helping clients manage their budget, credit, debt and more.
I spoke with ClearPoint credit counselor Thomas Nitzsche to find out how his organization has helped more than two million Americans since the recession.
Laying the Groundwork for Financial Security
Every client’s story is different at ClearPoint, but they all share one thing in common: He or she owes someone money and is having trouble paying their debts.
Many of them aren’t even sure how to track their finances at all.
“Many of the clients we see have never done any sort of personal budget before,” Nitzsche said. “That’s where we start, looking at assets, income, creditors, monthly housing and living expenses to get an idea of their cashflow and give them a financial snapshot of where they’re at right now. It’s surprising how many people aren’t aware of what’s coming in and what’s going out, so we provide tools and resources.”
“It’s surprising how many people aren’t aware of what’s coming in and what’s going out.”
The next step is to examine the client’s outstanding obligations with creditors. This includes a detailed analysis of their balances, interest rates, who they owe and what sort of concessions may be available to lower those rates and make payments more manageable.
“In some cases, that’s not possible,” Nitzsche said. “For about 80 percent of the people we see, we’re suggesting other actions. This could include overhauling their budget, working with a creditor directly or referring them to see an attorney. In about 20 percent of cases, we recommend a debt management plan through our agency to lower the interest rates, waive late and overlimit fees going forward and often reduce the total monthly payment.”
Crafting a Debt Management Plan
Once both the counselor and the client have a clear understanding of the client’s financial situation, they may begin working on crafting a personalized debt management plan, which involves the counselor verifying what concessions the creditors will offer the consumer to reduce interest rates, eliminate fees and often decrease the payment.
Once the counselor and client establish a plan, the client will then make payments to ClearPoint, which will then disburse it monthly to the creditors owed, conveniently saving time and money, as well as making sure payments are never made late.
Another option includes creditor in-house hardship programs.
“We’ll suggest the verbage clients can use when contacting their creditors directly,” Nitzsche said. “We tell them to be upfront with their financial hardship and give details they may not want to give. The more information a creditor has, the more likely they’ll be able to work with them.”
“The more information a creditor has, the more likely they’ll be able to work with [the client].”
And in some cases, simply asking the creditor for better terms turns out to be the best course of action.
“They can’t just call once and accept ‘No, we can’t help you’ as the final word,” he said. “They should try back another day or time. Sometimes it’s just a matter of finding the right person to be empathetic with their situation.”
If you still have difficulty working with creditors, you may want to contact a credit repair service that can negotiate on your behalf.
Helping Clients Through Finance’s Hard Lessons
In many cases, the ClearPoint counselors are able to work with a client and come up with a debt management plan that works for everyone involved. However, when this solution is neither practical nor feasible, bankruptcy may be the best option.
“People equate bankruptcy with failure a lot of times,” Nitzsche said. “They feel like their moral code doesn’t allow them to consider it. They don’t have the mindset that it’s a method of consumer protection.”
“People equate bankruptcy with failure a lot of times… They don’t have the mindset that it’s a method of consumer protection.”
During the required counseling for the bankruptcy filing, Nitzsche and his colleagues remind clients, “there is a life after bankruptcy.”
While such drastic measures remain on someone’s credit report for seven to 10 years (depending on which chapter they file), ClearPoint counselors remind them there are still actions they can take to rebuild their credit score in the meantime.
ClearPoint’s Financial Literacy Efforts
Each ClearPoint location around the U.S. also is an active member in local financial literacy efforts.
“Here in St. Louis, we’ve been pretty instrumental with Money Smart Week, a Federal Reserve Bank initiative to raise financial literacy among consumers,” Nitzsche said. “Classes range from very broad topics like budgeting to very specific like recovering after incarceration.”
ClearPoint University offers consumers a free online learning resource with topics ranging from banking to surviving the holidays.
The organization also has participated in some fun, quirky events. For example, ClearPoint has been known to partner with a paper shredding company to hold “shred days,” offering tips and resources for deterring identity theft.
ClearPoint is a Department of Housing and Urban Development (HUD)-approved counseling intermediary, helping homeowners maintain ownership and prevent foreclosure. Counselors also educate would-be homeowners, like those in the Habitat for Humanity program, to get a strong understanding of their finances.
Photo credit: ClearPoint Credit Counseling Solutions