The Federal Trade Commission (FTC) was developed to protect consumers from fraudulent, deceptive, and unfair business practices and to provide consumers with the information they need to recognize and avoid such practices. To help consumers make wise decisions about credit counseling programs and debt management plans, the FTC suggests they ask certain questions. These questions follow here along with our answers.


What is a credit counseling agency?

Credit counseling agencies differ from debt settlement companies in that they generally try to help their clients through education, budget planning, and debt consolidation programs before suggesting more radical methods like debt negotiation and bankruptcy.

They provide free education, budgeting classes, and a financial analysis to determine if a debt management program may assist you in eliminating your debt.

Credit counseling agencies do charge a fee for their services, but these fees are regulated by the various state regulators within the state you reside. So, it is often in your best interest to choose a non-profit program although it's important to do your homework before making a final decision.

Family Financial Education Foundation has been audited by the Internal Revenue Service (IRS) and has maintained its non-profit status while other credit counseling agencies under audit have lost their 501(c)(3) status. In addition to the IRS audit, FFEF undergoes a Certified Public Audit on an annual basis, as well as being audited by various state agencies to show compliance with the various laws and regulations imposed on credit counseling agencies.

You can rest assured that the programs designed by FFEF will meet your requirements in educating and helping you become debt free.

For more information on credit counseling agencies and regulations visit: http://www.ftc.gov/bcp/conline/pubs/credit/debt.htm


Criteria for placing a client on a debt management program

A debt management program is not right for everyone. Some debt is manageable, and it's better if the person can succeed in paying off his debt without involving a third party or legal paperwork. There is a lower chance of a negative impact on credit if the person can negotiate his own debt payoff program with his creditors. However, if the client meets certain criteria, it is usually helpful to get a trained credit counselor involved. The primary reason for joining the debt management program should be that the client can no longer afford to make the original minimum payments to his creditors. The potential client may be counseled to liquidate or downsize his or her vehicles, residence or other assets in order to make payments to creditors.

  • The individual is usually 30 to 90 days late in making his payment or his income has been reduced significantly making it impossible to stay current with his payments in the future.
  • The individual's credit report may reflect late payments.

  • Upon reviewing the individuals budget and comparing his income to his fixed, variable, and discretionary expenses, it is determined that the client cannot make full payments to his creditors but there is sufficient money available for a debt management program.

  • The individual has a source of steady income. He is encouraged to get a second job and/or his spouse should also obtain either full or part-time employment.

  • The individual has not opened any lines of credit recently or made charges on an account within the last three to nine months.

  • An individual / family who is current with his payments, capable of paying his monthly bills and expenses, and wants to keep his credit report untouched, is not a likely candidate for debt management, but would benefit more from a PayAccel Program.

  • An individual is paying extremely high interest rates and his balances are not going down.


What You Need To Know Prior to Enrolling In The Debt Management Program (DMP)

FFEF provides financial tools that can help you get and stay out of debt. But we don't just get you out of debt; we educate you so that you can remain debt-free. Every month you will have access through the FFEF web site to a monthly newsletter with important financial information and tips. You will also have access to 12 educational albums and 3 Financial Fitness workbooks regarding finances. There are many other tools online to help you. Our certified credit counselors will provide you financial coaching and counseling throughout your Program.

You will receive a Financial Analysis that reflects your current situation and a projected timeline in which you could become debt free. All creditors receive payments each month, and as balances are paid in full, the payment rolls up to the next creditor with the smallest balance. This accelerates your payments and decreases the time you are in debt and the money you will have to expend to achieve freedom from debt.

  • You can avoid bankruptcy by joining a DMP and pay your debts in full.
  • No credit checks are required, and FFEF does not require security or collateral.
  • You will make one easy monthly payment after which FFEF disburses to your creditors.
  • After three payments to FFEF, harassing phone calls should stop.<
  • After your first three payments, accounts will be re-aged (brought current) avoiding future late and over-limit fees.

Most creditors will reduce their interest rates for DMP clients. Interest rate reduction is important but not as critical as sending your full scheduled payment (or more if possible) each month even though a creditor or several creditors is/are paid in full.

The DMP is NOT a loan or loan process; FFEF does not pay your creditors until we receive your monthly payment.

FFEF encourages a monthly ACH withdrawal from your bank checking or savings account ensuring that your payment is received and paid out at the same time each month.

You should always read your creditor statements promptly to make sure your creditors are getting paid according to your DMP. You will be asked to send their statements the first four months you are on the program or whenever you have a concern regarding an account or a balance has been paid in full.

You will receive a Client Statement from FFEF each month showing when your payment was received and how and when it was disbursed.

A team of certified counselors will be available to help and answer any questions you may have.

Once the DMP is in place, it is important to:

  • Make regular, timely payments.

  • Contact FFEF if you are unable to make a scheduled payment, or if you discover that creditors are not posting payments.

Be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you've made on paying down your debt or the benefits of being in a DMP including lower interest rates and waived fees. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts "re-aged" again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have "late" marks and you will rack up late fees, which, in turn, will lead to more debt that may take longer to pay off.


How the FFEF Debt Management Program Works

Financial Analysis — You will need your most recent statements so that you can give FFEF a listing of whom you owe and the amount. We will then give you a monthly payment quote, interest savings and an estimated payoff date.

Enrollment—If you are comfortable with the payment quoted and benefits and wish to enroll in the program, we will go over your personal information, your monthly budget, and the way you wish to make your monthly payment.

Written proposals— FFEF will send proposals to negotiate with each of your creditors and ask them to lower the interest rates and minimize monthly payment amounts.

Consolidate bills—Once we receive your monthly payment, we'll make disbursements to your creditors. FFEF disburses payments to creditors four times per month (7th, 14th, 21st, and last day of month) through our licensed, bonded client trust account. Your first payment is due within 30 days of your enrollment.

Manage your debt—FFEF will manage your debt effectively using a process called rollup. FFEF will pay your creditors every month and will direct any extra money as a power payment to the lowest balance. After the lowest balance is paid off, then all of the money that was going to that account will roll up to the next lowest balance and so on. With this process, your payment schedule is drastically accelerated saving you both time and money.

Re-age Accounts—Besides having reduced interest rates, lower monthly payments, and having your debt handled effectively, FFEF can also help re-age accounts with most creditors. Re-aging the accounts brings the accounts current removing any future past-due fees.

Monthly Statements—FFEF will send you monthly statements to let you know your estimated balance and interest rate with each creditor as well as to remind you of your next payment. The statements will show you where your money is going and how your accounts are being paid down.

Educational Materials — Upon enrollment you will have access to the 12 educational albums and monthly newsletters available on the FFEF web site. You will also receive financial coaching and counseling throughout your Program from our certified credit counselors.


What services do you offer?

FFEF offers financial education, coaching, counseling, financial analysis, debt management plan, bill paying services, credit score review, and PayAccel.


Do you offer free information? Are educational materials available for no-cost?

FFEF is committed to helping people become debt free, which includes sending clients free educational materials. Clients also have available to them through the FFEF web site the FREE Family Financial Training Course which consists of 12 volumes. Titles include: Understanding Your Debt Management Program, Creating Your Budget, Implementing Your Budget, Managing Your Money, Improving Your Lifestyle, Understanding Your Credit, Reading Your Credit Report, Knowing Your Consumer Rights, Maintaining Your Home, and Planning Your Future.


What are your fees? Are there set-up and/or monthly fees?

Your initial consultation and debt management review are free of charge. In addition all of our educational resources are available and free to the public.

Once you have chosen us to help you succeed at gaining control of your finances your counselor will explain the fees and rates. At FFEF, our fee schedule is based on state-regulated enrollment and monthly fees and are minimal. Our complete fee policy is provided to you prior to enrolling in our program. The fee is included in your monthly payment and goes toward processing your payments, negotiations with creditors, and operating costs necessary to help you become debt free.


Will I have a formal written agreement or contract with you?

Every client receives an FFEF Engagement Agreement and a State Addendum, if applicable, for the state in which he or she resides.


Are you licensed to offer your services in my state?

FFEF is licensed or qualified to do business in all 50 states. Consult your state registry for more information, or call FFEF at (877) 789-4172 to find out more about your state's requirements.


What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained?

All FFEF counselors are accredited through independent organizations such as the Partnership for Financial Education (www.financialed.org) Certified Debt Management Professional, the Association for Financial Counseling and Planning Education (www.afcpe.org), and the National Institute for Financial Education (www.nife-ed.com). FFEF actively looks for appropriate continuing education for its counselors, and they receive ongoing training and education through staff and team meetings and special seminars covering sensitive financial matters.


What assurance do I have that information about me (including my address, phone number, and financial information) will be kept confidential and secure?

FFEF adheres to the Gramm-Leach-Bliley Act of 1999. Our privacy policy states that "your personal and financial information is confidential and should not be disclosed outside our company, except where such information is required by law to be disclosed or where disclosure is necessary and appropriate to complete transactions you have requested, authorized, and or instructed us to do on your behalf." You will receive a copy of our Customer Information Privacy Policy upon enrolling in our debt management plan. You may also view the policy by clicking first on the Resources tab and then on Privacy Policy.


How are your employees compensated? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization?

All FFEF employees are either salaried or hourly employees. It is against FFEF policy and the industry standards for any employee to receive commissions or other special compensation for enrolling a consumer in a debt management program.


What are some of the benefits of being on the FFEF Debt Management Program?

Many creditors will reduce the required monthly payment amount, lower or suppress interest, and re-age or bring the account current. However, we cannot guarantee that every creditor will make these concessions as each has its own set of parameters and procedures to which it adheres. FFEF has friendly, professional Client Care Teams that are eager to answer your questions and to help you with harassing creditor calls.


What is rollup?

One of the most important benefits of all is called "rollup". With rollup, your debts will pay off much faster than if paid by making normal monthly payments. To realize the full benefit of the FFEF Debt Management Program, monthly payments to FFEF should remain the same (or increase) until the last creditor is paid in full. As each of the smaller creditors is paid off, the creditor with the next smallest balance receives the additional payment, thus decreasing both the amount of interest paid to creditors as well as the time it takes to become debt-free.


Will you consolidate my debts?

Joining FFEF is perhaps the easiest way to consolidate your debts into one payment. We will do the work for you. All of your creditors will be taken care of through a single monthly payment from you. You can also find out more about our Bill-pay program and PayAccel.


What is the difference between Credit Counseling and Debt Settlement?

Credit Counseling is different than a debt settlement program because Credit Counseling is an honorable way to pay down your debt that does not destroy your credit. You will pay the full balance owed but significantly less in interest. It is a proven program and creditor calls will stop. It is a great way to avoid bankruptcy. You make monthly payments to your creditors, and on time monthly payments improve your credit score.

Debt Settlement is an aggressive approach to debt elimination that will significantly damage your credit rating, and there is no guarantee that the creditors will not seek legal action or that they will settle.

Essentially, with a Debt Settlement Program you stop paying your creditors and go into default to make the creditors think that you are in a financial hardship and unable to pay. The account will then be charged off and sold to a collection agency. A charge off can be just as damaging to your credit as a bankruptcy. You then start saving up enough money to offer the creditors a settlement and hope that they will settle.

You should know that with a Debt Settlement Program, your credit will take a huge hit. Your balances will go up in the first few months because of fees and interest. There is no guarantee that it will work. You will pay taxes on the amount of debt that was forgiven by the creditor and collection calls and activity will continue.

If you can afford to make a monthly payment to your creditors, Credit Counseling is a much better solution to honorably paying down your debt.


How do I enroll in the Debt Management Program?

Gather all of your most current creditor statements and call the Family Financial Education Foundation office at our toll-free number: (877) 789-4172. You will need to give the FFEF credit counselor a complete list of the creditors you owe and how much. Download an easy-to-use form here to help you collect the information. FFEF can then determine if you qualify for a debt management program. If so, they will calculate an appropriate monthly payment, interest savings and an estimated debt-free date.


What happens once I enroll in the Program?

Upon enrollment, your creditor data is entered into our computer system, and you are assigned a client number. Proposals requesting lowered monthly payments and interest rates are mailed to your creditors. Next, our office sends a packet to you that includes a welcome letter and client statement indicating your pre-negotiated monthly payment amount. You will also receive a Welcome Call from one of our credit counselors to review how the program works and answer any questions you might have.


How do I pay?

Your payments will be consolidated into one monthly payment that you send to FFEF, and your first payment will be due within 30 days of your enrollment. You are encouraged to use AutoPay, where FFEF will automatically electronically draft your bank account at the same time each month. AutoPay ensures your payment arrives at FFEF at the same time each month so that it is always disbursed the same day. Payments are disbursed to creditors four times per month - on the 7th, 14th, 21st, and last day of the month.


What if an emergency arises, and I cannot send my full payment each month?

It is extremely important that you consistently make full payments before your due date each month. Missing a payment gives creditors the option of canceling previously negotiated payment arrangements and taking you off their consumer credit counseling program. However, if you cannot send your full amount, send as much as you can, and we will proportionally pay your creditors unless otherwise instructed by you.


Will starting in your program stop the collection calls?

Yes, after enrollment we will contact your creditors and inform them that you are on our program and will be receiving payment shortly. Once a written agreement is in place, and usually after your first payment has been made they will stop calling as per the agreement.


What should I do when creditors call me?

Even after enrollment, creditors may continue to call you until they have received three consecutive, on-time monthly payments from you through FFEF. When creditors call, politely explain that you have enrolled in the FFEF debt management program. You may give creditors the FFEF telephone number (307) 789-2010, and ask them to contact us. You can also ask for the name and telephone number of the collector and report it to Client Care so that we can contact them and ask them to discontinue calling you.


What should I do if I change my address, phone number, job, or name?

Please call Client Care right away or make the change on your payment coupon anytime your demographics change. You must also notify your creditors.


May I apply for new credit while on the program?

We recommend that you do not apply for new credit while on the program. It may jeopardize the terms FFEF has negotiated with many of your creditors. If absolutely necessary, you may be able to purchase a secured credit card through your local bank, but you should contact your creditors before doing so to be sure this will not void the arrangements you have with them. Our counselors and materials will teach you how you can live without the need of credit.


May I use my debt management program to pay off secured debt like my home mortgage?

Yes. If you do include secured debt in your program, be aware that it is not negotiable: the interest rates will not be lowered, the monthly due date will not change, the account cannot be re-aged, and the minimum payment will not be lowered. Secured debt payments may be made only through the FFEF's AutoPay program or PayAccel program, and the account must be current.


May I add additional debt to my program after enrolling?

You are encouraged to add all of your unsecured debt at the time of enrollment, but you may add a new debt by sending Client Care a copy of the current statement from the creditor with your client number and a request to add the account to your program. Your monthly payment will be increased to include the new account, or if sufficient rollup is available, the rollup can be applied as payment to the account. However, if you use rollup rather than increase your payment, you will extend the length of your debt management program.