16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments #543670-00322

Submission Number:
543670-00322
Commenter:
Martin Lynch
Organization:
Cambridge Credit Counseling Corp.
State:
MA
Initiative Name:
16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments
(a)Cambridge Credit Counseling Corp. is able to provide data on clients enrolled on debt management programs since July 1, 2004. (b)Yes, particularly with respect to ongoing contact and education throughout enrollment. We use client feedback and our ISO 9001 continual improvement process to make changes to the DMP program. (c)13.43%. (d)Yes. Less than full balance (LTFB) products are offered to clients under the following circumstances:(1) Client is experiencing a financial hardship situation such that normal creditor concessions will not allow them to repay their debt; (2)The applicable creditor(s) offer a LTFB program; (3)The applicable creditor’s LTFB program only allows the forgiven amount to be the portion of the debt derived from fees and finance charges. Principle balance is not forgiven; therefore, the consumer’s debt is not reported as a settlement to the credit bureau(s) and there are no tax implications. The debt management LTFB plan allows consumers to repay the debts owed, at a discount, over 60-months and keep their credit rating in good standing. This is a much more effective plan than a consumer pursuing debt settlement, which negatively impacts credit, involves significant tax implications, and a write-off of principal. At present, Cambridge is only offering a LTFB program from one creditor. We have reached out to the credit granting community on numerous occasions and were advised that the LTFB program is being tested with select agencies, and that they are not seeking additional agencies to offer the product at this time. 2.(a)171,089 accounts were enrolled 7/1/04 – 12/31/09. (b)$484,520,726.90. 7/1/04 – 12/31/09. (c)$210,752,550.14. 7/1/04 – 12/31/09. (d)27,717. 7/1/04 – 12/31/09. 3.Debt Concessions (a)The average value of concessions for current consumers who complete a DMP is $2,168.27 annually. The average value of concessions for past-due consumers who complete a DMP is $4,555.63 annually. 7/1/04 – 12/31/09. (b)The average value of concessions for current consumers who enroll on a DMP is $2,780.42 annually. The average value of concessions for past-due consumers who enroll on a DMP is $5,358.70 annually. 7/1/04 – 12/31/09. 4.Fee Structure(a)$3,447,013.23. 7/1/04 – 12/31/09. (b)$3,029,619.58. 7/1/04 – 12/31/09. (c) Approximately 10.85%. 7/1/04 – 12/31/09. (d)Approximately 10.85%. 7/1/04 – 12/31/09. (e)A consumer who cannot afford the DMP payment to creditors based on their adjusted budget after a full financial counseling session has been completed.(f)The amount we charge varies by the consumer’s ability to pay and state and federal mandated statutes. The average initial fee charged is $43.55. The average monthly fee charged is $25.03. The average sum of fees charged for clients who completed the program is $836.16. 7/1/04 – 12/31/09. (g)The one-time initial fee is charged when the client starts the program, generally on their start date. The monthly fee is charged over the course of the program. It is collected with the client’s payment on a monthly basis, every month until they complete or exit the program. The client is only charged a monthly fee when they make a payment. They are not charged fees when they complete or exit the program early, make a partial payment that leaves us unable to pay all of their creditors a minimum payment, or cannot afford to make a payment at all. 5(a)Cambridge calculates a repayment term for all consumers when they join the program. The average full term of a DMP is 51.21 months for 12/1/08-12/31/09. Most clients do not reach the full 51.21 months because they complete the program early. The average client completes the program in 32.16 months. (b)20.00% are still active, however, 30.66% have completed the DMP program already. (c)4.27% are still active because they’ve added accounts after initial enrollment. 39.89% have completed the DMP program already. (This occurs when a client pays off creditors on their own without notifying us).