The economy is putting the squeeze on consumers and for many the bills are piling up. Jack Hogan, Tennessee Education Director for Consumer Credit Counseling Service, said there are some options that cash-strapped consumers should be familiar with – and many are not.
The Tri-State Defender recently had a conversation with Hogan to find about some of these options and other elements associated with financial literacy.
Defender:
The whole idea of negotiation (of bills). You say most people are not aware?
Hogan:
No, (they aren’t.) Everything is negotiable, even medical bills. Most people just pay it or not pay it for that matter. They don’t realize that a lot industries, particularly with credit cards, do have hardship programs available to people who are unable to pay their bills. It’s not "either go to credit counseling or go to bankruptcy." There are a lot of other options available.
Defender:
Why don’t people know?
Hogan:
In all honesty, I really don’t know if it’s that they don’t question or ask enough questions, or if the lender chooses not to let them know.
Defender:
When you say, lender, we are talking about house note or . . .?
Hogan:
Even a house note, even if they have gone into collections, how many people know they can call a housing counseling agency and work out arrangements to help them keep their house? Some say, ‘Well, I’ll just go file wage earner.’ And the ones that do don’t know what questions to ask.
Defender:
You say there are people putting out information, but it is not quite getting there?
Hogan
: Small sections and some areas. Churches and a lot of nonprofits are trying to get this information about financial literacy out, but there are always sections of town (not getting it.)
Defender:
Our newspaper focuses on the African-American community. I take it that this is a particular problem here?
Hogan:
Yes, that’s the same population that we serve. And that’s predominantly where most of our workshops are. Most of the individuals that we see are female heads of households and it seems like history has repeated the same cycle that they (knew) growing up. And a lot of times that information – financial information and how to handle business, how to handle money, and how to handle credit was never passed down. They basically did whatever their mother did. Sometimes that’s not the best situation, but that’s all they’ve learned.
Defender:
Let’s says someone says, "Okay Mr. Hogan. I got it. I want to do better. What do I do?"
Hogan:
If they are looking at unsecured debt, we can get a credit report, obviously start looking at the debt that they owe. Are they (the debts) time sensitive? Is there plenty of time to start payment arrangements? I would also suggest - if they haven’t implemented already – that they start some basic budgeting skills; be able to at least track where there money is going and make conscious choices on where to cut back.
I would very much consider money management like weight loss. If you’re writing down that information, you truly kind of make conscious choices about changing your behavior.
Defender:
On this idea of negotiating, is this something the individual consumer should do? Or are their agencies or support groups?
Hogan:
Our agency does it, but not really negotiate. We advise them on what they need to do. There are agencies out there that are called debt settlement agencies that I am not a big fan of. When I say negotiating, I’m not talking to the point of which they are getting ready to charge off into collections are legal. I’m just saying if the bill comes and the interest rate is to high, which causes you not to be able to pay, and this is primarily with unsecured debt, contact the lender and see if they can either reduce the interest rate or possibly put you on a program that is a little bit more feasible to your income.
Defender:
Why would a lender be interested in doing that?
Hogan:
In this day and age, the fact is wouldn’t you rather have more money coming in than an individual filing bankruptcy, where you are only getting a percentage of the debt. Their bread and butter consists of individuals who keep a revolving account. If they keep a revolving account, they get more money. Really, it’s a win-win situation as a whole because the individual also gets to continue to improve their credit report by making regular payments.
Defender: Am I sensing it right that this is really a harrowing time?
Hogan:
It is in Memphis I would say for sure?
Defender:
And why Memphis in particular? What are the factors?
Hogan:
Memphis, typically, most of your bankruptcies have no wage earner. Typically Memphis is plagued by poor health choices. Health care, divorce, loss of income. . .a lot of big factories are moving out of the city, which is putting a lot of people out of work. Typically, Memphis is more blue collar than administrative. And with a lot of companies moving across into Mississippi, it is making it difficult for individuals.
Defender:
It seems as though we are going to have to have a transition in the workforce. We’re going to have to update.
Hogan:
Anything administrative or profession seems to be far and few in between. Keep in mind that we have so many temp agencies. That is not a good sign.
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