"Credit Aid Agency's Strategy Draws Fire" [Dec. 24] mentions our "signed agreement" with payday lenders without adequately describing the nature of the agreement and its benefits to consumers. This, along with several other inaccuracies, paints an erroneous picture of our organization [Consumer Credit Counseling Service of Los Angeles] and our long-standing commitment to serving consumers with integrity.
Despite CCCS-LA's active role in supporting legislation to regulate the payday loan industry, more consumers than ever before find themselves in extreme financial difficulty as a result of borrowing in this way. These consumers have never been systematically referred to CCCS for assistance. Our agreement asks payday lenders to refer their clients to us, in exactly the same way as other creditors do. We are attempting to ensure that these consumers benefit from the help and support they desperately need. The only revenue derived by CCCS-LA from this agreement is the usual fair share contribution that is paid by the lenders (not the consumers) on the amounts disbursed to them each month.
The article also infers that we will encourage people to file for bankruptcy. CCCS-LA never has and will not encourage our clients to do this. It is our policy that our counselors should, whenever feasible, structure a debt-management program and only in those cases where clients are in such a critical financial state that they cannot be qualified for a debt repayment plan (by the standards set by their creditors) are they advised to seek legal assistance. Of the approximately 213,000 people that we counsel annually, only about 1,300 are advised to seek legal assistance.