Client Success: Committed to the Process New York couple is debt free after only four years When Carole and Don Carroll were first married in 1992, they generally had few debts. However, as the years passed, they faced increasing medical bills, ongoing car maintenance, child support payments, and an unexpected layoff. The Carrolls found themselves relying more on credit, while sinking deeper in debt. After a few months of not-so-gainful employment, Don began working full-time again. But, even as their income increased, the Carrolls realized that their combined income was barely enough to cover their monthly expenses. “At first we managed to keep up with the payments,” said Don. “Then the interest rates on all of the credit cards started to inch up, without us even knowing it.” In 2006, Carole got a new job working in investor relations at a hedge fund, while Don moved into a data analyst position for a financial news and information service. They had good jobs and enjoyed what they did but, as Don put it, “life kept creeping in.” As their debt continued to accumulate, making on-time payments became a struggle. They had more medical bills, the purchase of a new car and their move to a new apartment. Then the phone wouldn’t stop ringing. Instead of new credit offers, they were getting calls from creditors who wanted their money. Interest rates on their credit cards increased from nine percent to as much as 32 percent. While the Carrolls saw all the signs, they were just too busy to read them. Before long, they were staring down a bill for $89,000 – comprised mostly of high interest credit cards. In November 2006, Carole noticed a sign on the subway for GreenPath Debt Solutions. She contacted GreenPath and made an in-person appointment the next day. “It was pretty scary walking through those doors for the first time. We took a deep breath, entered, and were pleasantly surprised that our counselor didn’t judge us or make us feel bad because of our situation, said Don. “They treated us with respect and honesty.” The Carrolls worked with a GreenPath financial counselor to negotiate lower interest rates on their credit cards. They enrolled in a GreenPath debt management plan (DMP) where they paid their monthly bills through automatic withdrawal. “From the beginning, the Carrolls were committed to completing their DMP faster than the full sixty months the plan was designed to take,” said Peter Carrasquillo, GreenPath financial counselor. “They were confident they could change their spending or find additional funds, so they could pay more than the minimum DMP payments.” While Don and Carole were going through the process of paying off their debt, they also learned vital lessons about budgeting and the wise use of credit.
"As we paid one card off, we'd keep sending in the same amount of money, even though we could have slowed down. It felt so good to see progress," said Carole. Today they each have only two cards: a debit card and an American Express card that they pay off each month. "We need one card to rent a car or to take a plane, but when I buy something, I use my debit card, knowing that there's enough money in the checking account to cover it," said Carole. Due to their positive attitude and commitment to the process, Don and Carole have been debt free since this past March. "Don and I can sleep at night now, no one calls us anymore about our situation,” said Carole. “I am excited to be living on a cash basis. It’s a do over.” (Editor’s note: Don and Carole Carroll are GreenPath’s nominees for the 2010 PACE (Professional Achievement and Counseling Excellence) Award for Graduate Client of the Year, hosted by the National Foundation for Credit Counseling.)
FTC Issues Final Rule to Protect Consumers in Credit Card Debt In July, the Federal Trade Commission (FTC) announced a final amendment to the Telemarketing Sales Rule to protect consumers from deceptive and abusive practices by debt settlement companies.
“We’ve all heard the advertisements promising to cut your debt in half, get you out of debt in 12 months, and so on,” said Rick Bialobrzeski, GreenPath Director of Government Relations. “Making false promises like that will be illegal under the new Rule. Even more importantly, the Rule should stop the abusive practice of charging advance fees.”
The new Rule expands the scope of the law to cover not only outbound calls -- calls companies place to potential customers -- but also in-bound calls consumers place in response to advertisements and other solicitations. Provisions of the FTC’s new Telemarketing Sales Rule include the following:
The National Association of State Attorneys General recently submitted a letter to the FTC supporting the advance fee ban, stating that it “will prevent debt settlement companies from profiting even when they obtain no benefit for consumers, an all too common practice in the debt settlement industry.” The letter was signed by 41 state attorneys general.
“This is a very significant, positive development for consumers,” said Bialobrzeski. “Too many people have been ripped off by companies that charged thousands of dollars and did little or nothing to actually help them.”
For more information on the FTC Telemarketing Sales Rule, please visit www.ftc.gov.
Additional Support for Unemployed Homeowners
Last month, the Obama Administration announced that additional support will be available to help homeowners struggling with unemployment through two targeted foreclosure-prevention programs.
Through the Hardest Hit Fund, the U.S. Department of the Treasury will make $2 billion of additional money available to help homeowners struggling to make their mortgage payments due to unemployment. Each of the 19 eligible states will use the funds for unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training.
Additionally, the U.S. Department of Housing and Urban Development (HUD) will soon launch a $1 billion Emergency Homeowners Loan Program which will build on the Treasury’s Hardest Hit initiative by targeting assistance to struggling unemployed homeowners in other hard hit areas to help them avoid preventable foreclosures. Aid would be in the form of a 0% interest loan of up to $50,000 per borrower, for 24 months. The homeowner must be at least 90 days late. HUD will announce more details when the program is officially launched in the coming weeks.
“GreenPath is encouraged by the government’s efforts to provide additional aid to benefit more unemployed homeowners,” said Kathy Conley, GreenPath Housing Specialist. “These new programs should help take some stress off homeowners, so they can remain focused on getting back on their feet financially.”
Read the full announcement on HUD’s Web site, including state eligibility and funding amounts. Go to www.hud.gov and enter HUDNo.10-176 in the search box found in the upper right hand corner of the HUD homepage.
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