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CNN Saturday Morning News

Tools for Managing Personal Debt

Aired June 23, 2001 - 09:17   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: There's a good chance you and your family may be crippled by too much debt in this uncertain economy. Figures show that personal debt is at an all-time high, and mortgage delinquencies and write-offs by credit card companies are rising.

Now, here's a look at the amount of some incomes Americans are dedicated to debt payments. On an average, people with an income of $25,000 are paying out more than $3,000 a year on debt, $50,000 take- home, more than $7,000 in debt. A $100,000 income, more than $14,000 in debt.

With me now is Suzanne Boas, president of Credit Card Counseling Service, get that -- say that all together here. And you provide budget and credit counseling free of charge, right?

SUZANNE BOAS, CONSUMER CREDIT COUNSELING SERVICE: We absolutely do.

PHILLIPS: OK. First of all, let's kind of look at the overall picture here. How does this affect all of the United States? I mean, people with personal debt may affect someone that doesn't have a lot of debt overall.

BOAS: Oh, absolutely. When you have write-offs, when the company experiences write-off, that's a cost of doing business for them, and they end up, of course, having to pass that back on to the rest of us who are paying our bills on time.

PHILLIPS: So top three things we should do right away, if we are in a situation where we have a large amount of debt, what is your first recommendation as a counselor?

BOAS: Well, you know, I think the first thing is to take stock and to make sure that you are having a problem. And a lot of people are really in denial about their problem. At Consumer Credit Counseling Service, we often see people that have waited so long before they come in and ask for help. So we tell people to take a little test and see if you really are experiencing problems.

For instance, are you taking cash advances to pay for other credit cards? Are you taking a cash advance off one card to pay the minimum payment on the other? Are you arguing with your spouse about money? Or perhaps are you not even talking about it, you're afraid to talk about money? Those kinds of things are signals that maybe you need to sit down and really take a hard look at your situation. So that would be step number one, is look carefully at your situation.

PHILLIPS: Can you give me a success story personally? Obviously you've done a lot of counseling with people. Can you give me an example of how you know this has worked for somebody?

BOAS: Oh, absolutely. We see thousands of people really every month who pick up the phone and call us at Consumer Credit Counseling Service and go on the Internet or come in for a face-to-face counseling session, and they come in and oftentimes they'll say, Is this the worst case you've ever seen? Am I the only person that's having this problem?

And, you know, we sit down and we give a little good picture of, here's where you are today. Tell us about where you want to be. And we can lay out alternatives. And if they get behind it as a family and make some of those lifestyle adjustments, they can really dig themselves out of debt and get back to economic freedom, which is what we're all about, is putting people back in control of their finances.

PHILLIPS: Now, I have seen the commercials run, We'll help you, give us a call, we'll get you out of debt, we'll pay everything off. But then you find out -- I've heard these stories -- that you end up paying these companies so much more money in percentage rates, et cetera. What's the difference between those type of organizations that say they can help you, versus counseling with your organization?

BOAS: Right. Well, you know, in a free market society like we have in the United States, there are all sorts of options out there. So consumers do need to be careful, and when they call someone for help, they need to look for someone who's a nonprofit organization, who's got a board of governing body that's really concerned about the consumer, that they're accredited, that they've got certified counselors, and that they're not charging large up-front fees, that perhaps they're asking for a contribution or a small counseling fee, just for mod -- you know, a modest -- something in the $10 or $15 range would be a reasonable kind of fee to expect for a contribution, and that they've really got the consumer's best interests in heart.

PHILLIPS: Interesting. All right, thank you so much, Suzanne Boas of Consumer Credit Counseling Service. If you're having problems, give a call. You're stationed all across the United States, correct?

BOAS: That's right, they're all members of the National Foundation for Credit Counseling, and we have a 1-800 number that people can call 24 hours a day.

PHILLIPS: Suzanne, thank you so much.

BOAS: My pleasure.

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