Debt Resolution Program Unveiled at Capitol
02.18.2010 by Elizabeth Ziegler
(KCPW News) Utahns on the brink of bankruptcy now have a tool to help: a new program offered through AAA Fair Credit, a non-profit credit counseling service in Salt Lake City. President and CEO Preston Cochrane unveiled the new product at a Capitol press conference yesterday.
“What this does is it provides creditors a transparent assessment of the consumer’s repayment capacity by disclosing all of the facts regarding the consumer’s true financial capability,” he said.
Cochrane said the amount of debt for a typical Utah household has doubled during the recession, and now it isn’t uncommon to find families that are $40,000 to $60,000 in debt. And up to 80 percent of them don’t qualify for consumer credit counseling, leaving them with the difficult choice of declaring bankruptcy or enlisting the help of for-profit debt settlement companies.
The program, called a Debt Resolution Plan, uses a new algorithm to determine how much a family can afford to pay each month, calculating how much of the debt can be forgiven. The algorithm’s creator, consumer debt guru Robert Manning, said financial institutions haven’t been able to tailor debt solutions to individual circumstances in the past.
“There is a lack of standards in metrics throughout the industry, whether it is credit counseling at the top end, or bankruptcy at the bottom end or any kind of partial-payment plan,” he said. “And one of the key issues in formulating this program was the rise in debt settlement programs.”
The Debt Resolution Plan has been in the works for five years. A law passed by the Utah Legislature last year paved the way for its implementation.
Utahns on the brink of bankruptcy now have a tool to help: a new program offered through AAA Fair Credit, a non-profit credit counseling service in Salt Lake City. President and CEO Preston Cochrane unveiled the new product at a Capitol press conference yesterday.
18-DEBT 1 :11 “… true financial capability.”
“What this does is it provides creditors a transparent assessment of the consumer’s repayment capacity by disclosing all of the facts regarding the consumer’s true financial capability.”
Cochrane said the amount of debt for a typical Utah household has doubled during the recession, and now it isn’t uncommon to find families that are $40 to $60,000 in debt. And up to 80 percent of them don’t qualify for consumer credit counseling, leaving them with the difficult choice of declaring bankruptcy or enlisting the help of for-profit debt settlement companies.
The program, called a Debt Resolution Plan, uses a new algorithm to determine how much a family can afford to pay each month, calculating how much of the debt can be forgiven. The algorithm’s creator, consumer debt guru Robert Manning, said financial institutions haven’t been able to tailor debt solutions to individual circumstances in the past.
18-DEBT 2 :17 “… debt settlement programs.”
“There is a lack of standards in metrics throughout the industry, whether it is credit counseling at the top end, or bankruptcy at the bottom end or any kind of partial-payment plan. And one of the key issues in formulating this program was the rise in debt settlement programs.”
The Debt Resolution Plan has been in the works for five years. A law passed by the Utah Legislature last year paved the way for its implementation.
