Cashing In Q&A columns

The spiritual side of debt counseling


For the devout in search of debt counseling, faith-based organizations can offer more than just number-crunching, dollars-and-cents advice. They can offer spiritually sound financial counsel that can help debtors chart a course to financial freedom.

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When people get in trouble, they often turn to faith. These days, faith-based organizations can provide more than just spiritual guidance; they may help solve money problems, too.

Faith-based debt counseling combines practical financial guidance with a specific religious foundation. In the United States, the three largest faiths — Christian, Muslim and Jewish — share some commonalities in their approaches to money: the importance of making responsible financial decisions, making full repayment of all debts and charitable giving. Christian debt counselors, the most common type of faith-based debt counselors, advise clients according to principles found in the Bible, while Jewish principles are based on the Torah, and Muslim principles on the Quran.

According to numerous Jewish and Muslim experts, no specific faith-based debt counseling organizations exist within either faith. The lack of debt counselors within these religions, particularly among practicing Muslims and Orthodox Jews, can be attributed to the strict financial principles that govern their everyday lives, especially those concerning interest payments and debt repayment.

Because practicing Muslims are forbidden from paying interest on money borrowed, they can only use noninterest-bearing (also referred to as “Shariah-compliant”) financial products, says Abdi Shayesteh, a senior associate with King & Spalding law offices in New York City and a member of the Middle East and Islamic Finance Practice Group. “This is perhaps why you don’t see Muslim debt counselors — there is no need for a debt-counseling service company, because a practicing Muslim doesn’t subscribe to debt service products, such as credit cards.” Shayesteh is referring to ordinary credit cards, which charge interest on balances. Shariah-compliant credit cards have been introduced in recent years, which do not charge interest.

The Jewish Orthodox community similarly prohibits the payment of interest, according to Dena Shapiro Frenkel, an Ameriprise financial adviser and host of the Cents-able Finance radio show, which is broadcast out of Loyola College in Baltimore.

Both Jewish and Islamic laws require that the faithful not incur debt they cannot reasonably repay. Islam teaches that Muslims may only have a maximum of 30 percent debt-to-equity, or leverage, while Orthodox Jews are forbidden from borrowing money without a specific plan to repay that debt. “Debt is supposed to be something you can manage,” says Frenkel. “You’re not allowed to go into debt if there’s no way for you to get out of debt, so you have to have some sense of responsibility and accountability.”

Demand grows for Christian debt counseling services

For devout Christians in search of debt counseling, faith-based organizations can offer more than just number-crunching dollars-and-cents advice. They can offer financial counsel that can help debtors chart a course to financial freedom that stays true to biblical teachings.

“We teach what the Bible says, that we’re not owners, and that we are only stewards; we’re trustees of our possessions, and that God is the owner of all things,” says Chuck Bentley, CEO and president of Crown Financial Ministries, a Christian-based financial and debt counseling organization headquartered in Gainesville, Ga.

“That’s a major, major difference between biblical advice and nonbiblical advice,” says Bentley.

The arrival of Christmas credit card bills, combined with finance-focused New Year’s resolutions, makes January the peak season for Christian debt counselors, say experts. “This January is shaping up as an unprecedented month of demand for help from consumers nationwide,” says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies.

Advice on choosing
faith-based debt counselors
  • Check out their accreditation. Ask if the counselors are independently certified credit counselors.
  • Check with the Better Business Bureau or with your state consumer protection agency to find out if complaints have been filed against the organization. If so, proceed with extreme caution.
  • Check into the fees. A nonprofit credit counseling organization must offer free counseling sessions, and minimal to no fees to participate in the company’s debt management plan.
  • Be wary of anyone promising to improve your credit. The same goes for anyone dispensing legal advice, unless that person is an attorney.
  • Not all faith-based debt counseling are the same. Disparities can exist even between Christian debt counseling organizations. “Everyone has a different world-view per se, and what I call Christian might be different from what they call Christian. I try to go by the Bible that says a Christian is a Christ follower,” says credit counselor Jeffrey Telling.
  • Ask for references. Most reputable organizations have past clients or professional contacts to vouch for their honesty, so ask.
  • Seek out their affiliations. Check out a potential debt counselor’s website to learn about its professional affiliations, such as membership with the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or National Foundation for Credit Counseling (NFCC).

The demand for Christian debt counseling services continues to mount. Family Credit Management, which works with tens of thousands of families each year, estimates a 25 percent year-over-year increase in first-time consumer contacts since 2007, says Family Credit president Michael McAuliffe.

AICCCA’s member counseling agencies, which serve approximately 2 million consumers annually, have seen an approximate 20 percent increase over the past year, says Jones. “Add to that the demand for bankruptcy counseling and housing counseling and you have a major increase in consumer demand. Christian credit counseling demand has followed suit. We do not expect to see this trend reverse anytime soon. As the financial crisis worsens, more people need help. However, we are now beginning to see more and more consumers that are beyond help and we expect to see a dramatic rise in personal bankruptcy filings.”

Few have escaped some level of financial woes. “Today, even churches themselves are struggling with debt and mortgages, with many churches themselves facing foreclosure,” says McAuliffe.

To date, Crown has served more than 50 million people worldwide, with a stunning 140 percent increase in Web and e-mail traffic between September and December 2008 alone. Bentley attributes these burgeoning numbers, in large part, to broad-scale lifestyle changes, especially in the United States. “I think you’ve seen culture rapidly change effectively over the past 50 years in the things that we value and the financial habits that were formerly really just a part of our core values have changed, and so we’ve seen a much greater need to keep up with the times and help people,” says Bentley.

Secular versus faith-based debt counseling

Faith-based and secular debt counseling organizations differ; each should be considered on its own merits.

In her quest to seek help to manage mounting debt, 38-year-old Chicago retail investment sales assistant Kay J. interviewed one secular for-profit organization that turned her off immediately. The company offered her one way to pay off her debts — through a debt settlement plan, in which she would pay approximately 70 percent of her debts, plus significant fees to the debt counseling company. Such a plan meant Kay (who asked that her last name not be used for privacy reasons) would have a credit report showing “debt settlements” long after she’d made her final payment, which would negatively impact her creditworthiness until each item dropped off her report years later. The bottom line for Kay, though, was that a debt settlement would have dishonored her Christian beliefs and gone against the teachings of the Bible, which dictates that borrowers pay all debts in full.

Though finding a debt-counseling agency with similar spiritual beliefs is important, experts remind consumers that not all so-called faith-based organizations have the consumers’ best interests at heart; nor are all secular debt-counseling services for-profit.

In fact, experts encourage consumers to use nonprofit credit counselors, accredited by through Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC).

Kay eventually turned to Family Credit Management Services. “I liked the fact that their website had them listed with different bureaus and showed their credentials, that they were not-for-profit, and that they offered debt elimination,” says Kay.

This is paramount when dealing with debt counselors, since scam artists abound in the industry, says Jones.”I believe many people, especially people of faith, are buffaloed sometimes by going to organizations that claim to be as faithful as they are, but in some cases, may not be,” he says.

Even if the Christian organization — say, your church — is on the up-and-up, smart consumers must assess the debt counselor’s level of professionalism. “It is legal in many states for a church to provide counseling. They don’t have to be registered or licensed if they are a nonprofit church, and so it is entirely possible that well-meaning Christian organizations could have credit counselors in place who are not educated to provide the right kind of counseling and help to people,” says AICCA’s Jones.

What the Bible says
about debt and finances
Debt: “The rich ruleth over the poor; And the borrower is servant to the lender.” Proverbs 22.7

Translation: “Borrowing leads to slavery. The Bible doesn’t condemn borrowing; it doesn’t call it a sin, but it does warn against being imprudent with debt,” says Crown Financial Ministries’ Bentley.

Love of money: “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” 1 Timothy 6:10

Translation: That’s right — it’s the love of money — not money itself — that is evil, according to the Bible.

How faith-based debt counseling works

Family Credit Management’s counselors approach each client’s situation individually. “The first thing we’re going to do is listen to the client and ask, ‘What is your objective here? What are your goals? Obviously you probably want to get out of debt; you would like it to go away, but we need to examine where you stand.’ We can’t put a plan together until we know where to begin,” says Family Credit’s Central Illinois regional manager Jeffrey Telling.

Developing a spending plan means determining income and “outgo” in detail, on paper, so clients can chart their finances. Success comes in many forms, says Telling. “We have to define success. If I help someone learn to budget, and they go do it on their own without entering my debt management program, where they pay us and we pay the creditors, is that a success? Absolutely. It’s like if you feed a man a fish, and he’ll eat today, but teach a man to fish, and he’ll eat forever. We prefer to show them how to do it. There’s the greatest reward in that, and they will be what we would call recovered from the situation that got them where they are.”

After assessing Kay’s situation, her counselor created a budget by dividing Kay’s total debt into a 36-month monthly repayment schedule. Until Kay’s debts are paid in full, her credit report shows that she is in a debt elimination program. However, she says, “As soon as everything is paid off, then that is removed from my credit report and it’ll just show that my debts have been paid.”

Taking responsibility: A Christian principle

The first step for those who turn to Christian debt-counseling organizations is to learn what the Bible says about debt. “God doesn’t want you to be in that bondage, and he has specific rules and instruction and principles to follow to help you get out of it. One of these principles is to take responsibility for the problem, and do not run from it; to be straightforward and honest and humble, and to do what you need to do to honor the obligation that you have. The scripture teaches that it’s the borrower’s responsibility to repay,” says Crown’s Bentley.

In some cases, bankruptcy may seem the only choice, but “we believe that it’s not the best solution,” says Bentley. “The best solution is to make the hard decisions necessary to repay what you borrowed and to walk through that with integrity and character and to make every possible effort to avoid it.”

Tithing, a practice in which a Christian gives a set amount, usually 10 percent, of his gross income to his church, is strongly encouraged in Christian-based debt counseling, though neither Crown nor Family Credit make tithing mandatory. “God would rather have us be a cheerful giver, as opposed to someone who has blind faith and just completely says, ‘I’m going to tithe if it kills me.’ That doesn’t make sense. He’s the God of mercy, not law, so we make it as a personal, individual decision,” says Telling.

A long-term lesson

For most faith-based counselors — and their clients — the most advantageous bottom line comes in the form of teaching people to be content and wise with what they have. Often, this means dispelling money myths, such as the popular belief that more money equals greater joy — what Bentley refers to as “the real stumbling block for many people.” “In the Bible,” says Bentley, “success is defined by our faithfulness with what we have, and success can be achieved whether you have much or little. We do not teach the prosperity gospel, nor do we teach the poverty gospel. Righteousness is not obtained through poverty, and it’s not obtained through prosperity; it’s obtained through being faithful to Christ, who gave some people much and some people not so much.”

“A biblical message is universally true, and the Bible’s concern isn’t what you have; it’s really what you do with what you have — and it’s how well we have used it for God’s purposes for our lives.”

See related: The good guys of credit repair, Shariah-compliant credit cards become more common

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