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Debt piling on, fewer seeking help

Americans are still accumulating more debt now than in previous years. Surprisingly, however, fewer consumers are seeking counseling or pursuing other means of debt relief.

The National Foundation for Credit Counseling says that, from 2009 to 2010, the number of consumers seeking help from credit counselors decreased 20 percent. That downward trend has continued into 2011.

In the first half of 2010, the Association of Independent Consumer Credit Counseling Agencies reported that consumers signing up for debt repayment plans dropped 38 percent. Although people do not seem to be chasing debt relief, consumers are also not for filling bankruptcy as much. In fact, compared to the same time last year, consumer bankruptcy filings are down 10 percent, says the American Bankruptcy Institute.

What is interesting about these numbers, is that the amount of consumer debt in the country has continued to rise. $18.4 billion more consumer debt was accumulated in the second quarter of this year than in the first quarter, according to a CardHub.com study. That is a 66 percent increase from the same quarter last year and a 368 percent increase from two years ago.

Experts find it troubling, but give a few conjectures as to why people are not seeking help. A spokeswoman for the NFCC posited that some people are "just tired of trying and have given up." Others, like the CEO of Freedom Debt Relief and a board member of the Association of Settlement Companies, worry that cost may be deterring consumers from getting debt counseling. Although a new rule from the Federal Trade Commission does not allow companies to charge upfront fees for debt settlement services, customers still have to pay once a settlement is reached.

While experts have contended that some consumers do not have enough assets to file for bankruptcy, others may find it to be a useful technique to fend off harassing creditor phone calls and stop a foreclosure. Although it may seem like there is no way out of accumulated debt, there are ways to find debt relief and start rebuilding credit.

Source: USA Today, "Fewer people in debt trouble seeking counseling, other help," Christine Dugas, Oct. 12, 2011

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