By Matt Fredmonsky
Record-Courier staff writer
As the credit market tightens, Portage County residents may find themselves indebted to increasingly inflexible credit card companies, banks and lenders.
More and more area residents are seeking out credit counseling from Family and Community Services, Inc. as financial markets continue their steep declines. The non-profit agency is among few in the area certified and accredited by the National Foundation for Credit Counseling.
In August, F&CS counseled 191 clients on credit matters. Those numbers included 111 bankruptcy certification sessions. The agency averages 200 clients a month for all its credit and bankruptcy counseling services. The number of people filing for bankruptcy in the county, or who may need counseling help, could be higher because many private for-profit entities offer similar services but don't report their client numbers.
Kelly Paton, the coordinator of the Consumer Credit Counseling program for F&CS, said nearly all of the people who enroll at the agency for counseling have no choice other than bankruptcy.
"The sooner we are able to see people the options open up quite a bit, but if it gets to a point where the debt has just escalated so much or collectors have started taking legal action, the client's options become very, very few," she said.
Paton said the agency works with creditors on behalf of clients to try and lower interest rates and set a fixed monthly payment. The initial counseling session is free.
"The credit counseling is individualized sessions with a certified credit counselor where we review budget, outstanding debt and household finances," Paton said. "From that point, the counselor would determine feasible options for the household, one of which is a debt management program."
Ultimately, creditors must consent to program participation, but if a client is accepted most creditors waive late and overage fees. Under the program, a client makes one monthly payment to F&CS, and the agency then distributes the money to each individual creditor. The programs typically require a client to stop using a credit card or loan account.
"It really makes the clients money work harder for them in paying fewer fees and getting the debt reduced more quickly," Paton said. "We're a good resource for people trying to keep things afloat or who are anticipating things are going to become a struggle."
The program helped one Randolph Township couple pay off close to $45,000 in debt in less than five years.
The couple, who asked not to be identified, started the program in February 2005 after seeking help from Catholic Charities. The husband said the couple were able to avoid bankruptcy, and now their only outstanding debt is reflected in mortgage and car loans.
The couple fell into debt after the wife tried to start two small businesses through parent corporations. One of those corporations, Pampered Chef Ltd., allowed her to rack up thousands of dollars in merchandise on a corporate credit card on the premise she would pay the balance as she sold off the kitchen products.
"Once we got behind on a payment, they just kept upping the monthly rate," her husband said. "And when I was trying to deal with the companies, some of them just wouldn't give you a break, no way."
The husband tapped his 401k to help meet the program payments of $1,100 a month. But, he says, it was worth it despite losing his retirement fund.
"I get to be debt free and live off my social security," he said. "If everything goes well, we'll have the house and car paid off in five to six years."
Mark Frisone, executive director of F&CS, said the program is self-sustained through the payments made by clients. The agency receives a small percentage of the payment back from creditors. The United Way of Portage County also has been a long-time supporter of the 30-year-old program by helping pay for community education presentations about credit, bankruptcy and financial management.
Frisone said the program is one of the last face-to-face counseling options in the state.
"It's a win-win situation," he said. "It provides the debtor with a vehicle to get out of debt, the creditor is assured they'll receive payments and F&CS gets a modest amount to operate the program."
Family and Community Services offers consumer credit counseling at its Kent location, 143 Gougler Ave., in the city's West River Neighborhood.
In August, F&CS saw 191 clients for credit counseling services -- 111 were bankruptcy related -- and averages 200 clients each month.
The program's coordinator, Kelly Paton, offers financial literacy classes on budgeting, credit and the credit industry tailored to individual groups and organizations. Group finance education sessions can be arranged by calling 330-677-4124.