"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.
To serve those clients better, we are researching area law firms to determine those with the highest ethical standards who will economically provide bankruptcy services. Other services provided by our wholly owned subsidiary will be pre- and post-bankruptcy education of the type envisioned by the pending amendments to the bankruptcy code, to ensure that clients are fully informed of the implications and procedures involved in filing bankruptcy. The new entity will also provide those clients who can only afford to "self-file" with an economical "document preparation" service.
Furthermore, the article states that we will be providing "bankruptcy advice." For the record, CCCS-LA and its subsidiary will not provide legal advice. At the present time we refer clients to area nonprofits such as Legal Aid and Public Counsel. In the future, our subsidiary will also, when requested and appropriate, refer clients to pre-qualified law firms after further economic analysis has determined that bankruptcy is the only viable option.
Consumer Credit Counseling
Service of Los Angeles