National Foundation for Credit Counseling (NFCC)

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National Foundation for Credit Counseling (NFCC)

What Is the National Foundation for Credit Counseling (NFCC)?

The National Foundation for Credit Counseling (NFCC) is a non-profit credit counseling network that spans the country. Counseling clients who have taken on too much debt is one of the key services given by NFCC member organizations, with the objective of stopping them from declaring bankruptcy.

To accomplish this goal, NFCC members often advise their customers to enroll in a debt management plan (DMP), in which the client makes a single monthly payment to the NFCC member, who then utilizes the money to settle the client’s obligations.

Key Takeaways

  • The National Foundation for Credit Counseling (NFCC) is a membership organization that represents credit counseling businesses’ interests.
  • While lobbying Congress on behalf of the industry, the NFCC offers educational tools and accreditation to its members.
  • While it is uncommon, consumers should be warned that certain unscrupulous credit counselors may strive to abuse clients by concealing their costs or overstating their own capabilities.

The DMP technique is predicated on the NFCC member successfully negotiating more flexible debt repayment arrangements with the client’s creditors, which may or may not be true in reality.

Unfortunately, some unscrupulous credit counseling companies have been known to offer unrealistic or false promises to their consumers, putting them in an even worse financial situation. As a result, the NFCC seeks to uphold ethical standards in the credit counseling sector.

Understanding the NFCC

The NFCC was founded in 1951 and now includes member agencies in all 50 states, as well as the District of Columbia and Puerto Rico. 1 The National Foundation for Credit Counseling serves as a coordinating organization for its member businesses while also lobbying the United States government on behalf of the credit counseling sector.

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The NFCC’s key tasks when working with its member businesses include certifying individual firms and offering training and other resources to new debt counselors.

To retain their NFCC certification, member businesses must guarantee that their personnel is sufficiently educated and that yearly audits of their operating and trust accounts are conducted. NFCC member businesses must also conduct continuous consumer education initiatives, as well as demonstrate that any monies held on behalf of customers are distributed to those clients’ creditors on a fortnightly basis.

In recent years, several consumer advocacy groups have chastised the credit counseling sector for allegedly exploiting certain vulnerable consumers. Aside from clearly fraudulent firms who receive customers’ money and do not pass it on to their creditors, several allegedly reputable credit counseling agencies fail to make it clear that their services are often not free for the end-user.

Real-World Example of the NFCC

Emma is having difficulty repaying her bills and is seeking the assistance of a credit counselor. She discovers on the website of an NFCC-accredited credit counseling firm that the company is a non-profit that offers services such as credit score reviews, advice on how to avoid foreclosures, information on how to use products such as a reverse mortgage responsibly, guidance on student loan repayment plans, and assistance through DMPs.

She is able to pay off her debts one modest monthly payment at a time because to her employment with the firm.

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