Mike Cherry was elected as vice-chairman of the Board of Directors of the National Foundation for Credit Counseling, a group for which he has served as a member for four years. Cherry is president and CEO of Consumer Credit Counseling Service of Springfield.
Q: What is the National Federation for Credit Counseling?
A: It's a membership organization for consumer credit counseling agencies across the country. It does intermediary work with the major credit card companies to get concessions for the people that we work with - lower interest rates, waving fees, lowering balances. They also work on Capitol Hill in getting laws passed to control debt settlement companies, payday lenders or lenders that are ripping people off.
Q: What services does your organization provide?
A: We can work with a mortgage lender to work out arrangements to keep people in their homes, make up delinquent amounts or get mortgages rewritten. We go into schools, we go into businesses, we provide on-site classes and we have in-house classrooms here. We're approved by the U.S. Department of Justice to counsel people prior to them filing for bankruptcy, which is now required, and we also provide a required pre-discharge credit education class. But what we're best known for is debt management planning.
Q: Is there more demand for your services in this economy?
A: We saw the big wave of foreclosures and helped people work through that, and now we're seeing people with unemployment starting to run out. Even though we get them modified terms on their mortgage, now that their unemployment is gone, they're running into the same problems. Also, we see people that have been laid off that had good mortgages to begin with, but now they're having problems just because their income has been reduced. I think we're in for another wave of mortgage problems before we get everything straightened out.
Q: Are there other problems on the horizon?
A: There's still a huge amount of credit card debt out there that the delinquency rate is going up on. There has been some legislation passed that doesn't take effect until next spring, and that's going to mandate the credit card companies to give better notification of rate changes or the opportunity to opt out of a card. But we're seeing major card companies raising rates on cards just because they're going to be controlled next spring, so they want to get to as many customers as they can. That is driving up the payment on the card, through no fault of the consumer.
Q: What advice do you have for people to prevent financial trouble?
A: We've lived in an immediate-gratification society for the last decade. Everybody wanted something and they got it - they didn't care what it cost to the future, they went out and they got it. You're going to see that society long gone, and hopefully it won't come back for a long time. People are going to have to learn to live within their means. If they want to by a TV set and can't afford to pay $1,000 for it, they need to put aside $100 a month and buy it in 10 months, rather than buy it now and worry about how they're going to pay for it down the road.[[In-content Ad]]
