Debt Settlement Part of the Healing Process For A Sustainable Economic Recovery, New Academic Study Says
DALLAS-(Business Wire)-September 24, 2009 - Credit Solutions endorses a recently published academic white paper that says Debt Settlement offers “the most immediate form of debt relief available to consumers in today’s tenuous economy” – and may even improve the odds for a sustainable economic recovery.
Written by Drs. Bernard Weinstein of Southern Methodist University and Terry Clower of the University of North Texas, Debt Settlement: Fulfilling the Need for an Economic Middle Ground is the second timely study of its kind documenting the consumer benefits of debt settlement, a form of debt relief that offers financially struggling consumers an alternative to filing for bankruptcy.
A leading settlement industry association, the U.S. Organizations of Bankruptcy Alternatives, published this new study, which is being made available to the public and to policy makers.
“Research such as this reiterates the pivotal role settlement companies play as consumers’ financial advocates,” said Credit Solutions CEO Doug Van Arsdale. “We at Credit Solutions commend the authors and USOBA for documenting how vital debt settlement has become in today’s economy.”
Read new white paper in its entirety at http://www.creditsolutions.com. Key findings include:
- The great advantage of debt settlement over the alternatives is consumers can satisfy outstanding obligations while paying less than the full amount of their unpaid balances.
- There are several downsides to using credit counseling agencies. Most important, the total amount of consumers’ outstanding debt is not reduced.
- Credit counseling agencies receive payments from both consumer and credit card companies. This additional payment, or “kick-back,” from creditors is a percentage of the payments creditors receive from consumers.
- Many credit card agencies have been hiking interest rates on outstanding balances, causing debtors to find themselves running faster and faster just to stay in place while the timeframe for paying off creditors is stretched out. Hence, some consumers will drop out of credit counseling and simply declare bankruptcy.
- As with credit counseling, debt consolidation does not reduce the total amount outstanding. A consolidation loan probably isn’t a viable option for most households with high levels of difficult-to-service debt obligations because these consumers lack a decent credit rating for home equity loan access.
- Debt settlement can be viewed as part of the healing process to get distressed U.S. households back on a sound financial footing and thereby improve the odds for a sustainable economic recovery in the years ahead.
About the Authors
Dr. Bernard L. Weinstein, Ph.D., is the Associate Director of the Maguire Energy Institute and an Adjunct Professor of Business Economics in the Cox School of Business at SMU in Dallas. From 1989 to 2009 he was Director of the Center for Economic Development and Research at the University of North Texas, a position now held by Dr. Terry Clower, Ph.D.
The author or co-author of numerous books, monographs and articles on economic development, public policy and taxation, Dr. Weinstein’s work has appeared in professional journals such as Land Economics, Challenge, Society, Policy Review, Economic Development Quarterly, Policy Studies Journal, and Annals of Regional Science. His work has also appeared in The New York Times, The Wall St. Journal, The Los Angeles Times and abundant regional newspapers and magazines. He is a former member of the editorial board of Society Magazine and currently serves on The Dallas Morning News Board of Economists.
An Associate Professor of Applied Economics at UNT, Dr. Clower was employed in private industry, working in logistics and site location management positions prior to joining UNT in January 1992. He has served as project manager, staff researcher, and statistical analyst on projects in labor relations, economic and community development, and transportation; public utility issues; and economic impact analyses.
About USOBA
USOBA is dedicated to providing its member companies with important, industry related information, including compliance requirements, as well as advocating on behalf of its membership for fair and appropriate industry regulation that maintains the utmost in consumer protection. For details, please visit www.usoba.org.
About Credit Solutions
The nation’s debt settlement industry leader, Credit Solutions is recognized by the American Business Awards for the "Best Customer Services Department in Financial Services" and won a 2009 Red Herring 100 North America Award for its custom online technology. A USOBA charter policy partner, Credit Solutions is certified by BSI Management Systems for USOBA best-practice compliance. For more information, visit www.creditsolutions.com. En español: http://espanol.creditsolutions.com/.
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