As Financial Literacy Month comes to a close, I wanted to take some time to reflect on the financial situation facing many North Carolinians — and the rest of our countrymen.
As a pastor of a church in Halifax County, I have seen firsthand the financial devastation brought on by the pandemic.
The job losses and economic upheaval caused by COVID-19 have forced many into a difficult situation. Unpaid rents and mortgages, unpaid credit card bills and unpaid medical bills are putting a lot of us into dire straits.
Across the country, legislators at the state and national level have their hands full.
As the COVID-19 pandemic simmers, preventing a return to normalcy in the immediate future, policymakers and regulators manage the continued economic fallout along with countless other issues, endeavoring in each instance to do what is in the best interests of their constituents.
Given this situation, it is confusing to me that our state house of representatives has decided to pass legislation that would have a massively detrimental impact on the pocketbooks of consumers across the state.
This legislation would eliminate the ability of North Carolinians to negotiate more favorable terms with their creditors.
This measure would wipe out the choices of consumers and erase debt settlement as an option for struggling North Carolinians.
The house recently voted on the bill, which could immediately force thousands of North Carolinians into bankruptcy.
Debt settlement works by allowing the private sector to take on clients and help them reduce their debt.
By partnering directly with consumers, debt settlement providers can negotiate with their creditors to lower the amount of money they owe and, by setting up personalized plans for each client, help them pay off the debt they have accumulated faster than they would have been able to do alone.
Most clients across the country can owe upwards of $25,000 in unsecured debt and are already behind on at least one, and, in many cases, all of the accounts they hold, before they join a program.
With the help of debt settlement, most will take the first step on the road back to financial independence weeks after joining a program as three out of four clients will have settled at least one account within the first four to six months after enrollment.
Even among those who may not complete their full program, on average debt settlement saves $2.64 for every $1 in fees paid.
Additionally, for these consumers whose only other option is bankruptcy, credit score recovery is significantly faster than the available alternative. Unlike bankruptcy, which could have credit score implications for seven to 10 years, debt settlement clients see their credit scores fully recover, on average, 45 months after enrollment.
Debt settlement companies last year settled more than $98 million in unsecured consumer debt in North Carolina alone.
Despite these and other incredible results, a handful of legislators in Raleigh are trying to shutter debt settlement companies across the state and take this valuable option away from consumers.
In their misguided view, our industry is rife with bad actors looking to pocket the money of as many hardworking Americans as possible within the shortest period of time.
The facts tell a story that could not be further from this misleading narrative, as evidenced by the groundswell of thousands of North Carolinians who have recently reached out to their elected officials urging them to reject this bill.
Across the vast majority of states around the country, the debt settlement industry helps hundreds of thousands manage and reduce their debt.
And not just anyone can enter a debt settlement program – before a potential client is accepted, they are vetted by the provider to ensure they have the best chance to succeed through their personalized regimen.
Only approximately one out of 10 who apply are eventually enrolled.
After joining a debt settlement program, clients begin making payments into an account dedicated to paying off their eventual settlements.
At no point – at any time in the debt settlement process – can a company remove any funds from a client’s account.
Their funds remain 100 percent under their control.
Due to strict regulations set by the federal government, only when a consumer accepts a negotiated settlement are they billed for any service.
Moreover, clients are free to leave their program at any time, for any reason, without any financial penalty.
The success of debt settlement companies is bound to the financial wellbeing of their clients. Now is not the time to throw up roadblocks to a service working for thousands of struggling North Carolinians, especially as so many more live under the specter of debt.
The debt settlement industry is responsible for saving Americans over $1.65 billion annually – now is not the time to make life harder for North Carolinians.
C.E. McCollum is pastor of Oak Grove Baptist Church