Christian Debt Consolidation: Sinner Beware

Christian debt consolidation shares in the problems endemic in an industry that, as recently as ten years ago provided a real and valuable service. The problems with these businesses has gotten so bad that the Credit Info Center advises against using any debt consolidation service and especially any so called Christian debt consolidation service. This is not an anti Christian bias but a warning against using a service that uses the word “Christian” to gain people’s trust.

The IRS is auditing the top 50 debt consolidation agencies and the Better Business Bureau reported 1480 complaints in 2002 as compared to 261 in 1998.

According to the Consumer Federation of America, the questionable practices of Christian and other debt consolidation services include the following

1 Deceptively claim fees are voluntary and do not adequately disclose fees
2 Excessive costs-some agencies charge as much as a full month’s consolidated debts just to set up an account
3 Abuse of non–profit status. Christian debt consolidation, along with its secular counterparts functions like a for-profit business with aggressive advertising, close ties to for profit firms, getting high revenues and paying high executives much more than that paid to the average non-profit executive.

A new tactic used by Christian debt consolidation services is to require the consumer to buy their counseling and educational services, which are supposed to be Bible- based financial counseling.

There are a few honest agencies out there and there are still millions of Americans who need debt consolidation services and financial counseling.
A basic minimum requirement for using a service should include approval by the Better Business Bureau. There are several red flags to look out for:

– High fees-more than $50 set up and $25 per month. Look out for “voluntary” fees that are not so voluntary
– The hard sell-the person on the phone is reading from a script and pushing debt “savings” or a future “consolidated loan.” You certainly do not want to get even further in debt.
– Employees are paid commissions
– They come up with a plan for you in less than 20 minutes. A plan should take at least 30 minutes.

The Christian debt consolidation service will sometimes immediately switch you to a generic service. Some give Bible based reasons for getting out of debt. An example of a Christian service is one that said it was free and had no setup fees. The consumer would have to share part of the internal costs (postage stamps, envelopes, check stock, and bank fees) which would be tax deductible! The consumer also had to purchase a Bible based counseling and education package.

There was one site that offered the most refreshing advice. Quoting Paul in Romans “Owe no man anything, but to love one another,” it advised people to cut up all credit cards and pay them off. It further urged that people pay cash for all purchases, sell off a mortgaged property that could not immediately be paid off, sell all unnecessary household items, and provide for only the basic needs for themselves and their families.