CGMA often gets requests for debt consolidation loans. Many studies have been conducted on whether or not debt consolidation loans work. According to Bankrate.com
"With debt consolidation, borrowers are getting symptomatic relief, not a credit cure."
A major problem with debt consolidation: It feeds upon the tendencies that got the individual in trouble in the first place. The borrower does not learn new habits, they just get a temporary fix to a much larger spending problem.
According to the president of Cambridge Credit Counseling Corp, 70 percent of Americans who take out a home equity loan or other type of loan to pay off credit cards end up with the same (if not higher) debt load within two years.
In other words, debt consolidation loans do not work without consumer education and modification of spending habits.
If a CGMA client is requesting assistance to alleviate high interest loans or credit cards, the first step is to get the client financial counseling.
Depending on the client's situation, the CGMA Representative may decide to:
Counseling may be used to determine the root or cause of the financial problem, and what course of action should be taken to help the client achieve the goal of meeting their financial obligations. This may or may not include receiving financial assistance from CGMA.
CGMA-HQ has established an agreement with the National Foundation for Credit Counseling (NFCC), for financial counseling services provided by their member agencies, the majority of which are known as Consumer Credit Counseling Services (CCCS). Details may be found in the CGMA/NFCC Agreement CGMA Form 22 (pdf) .
If after receiving financial counseling services, it is determined that financial assistance is needed from CGMA, clients may apply for debt management assistance. All requests for debt management assistance, regardless of amount, must be reviewed and approved or disapproved by the Executive Director. When all required items have been received, the complete package, including a recommendation from the local CGMA Representative, will be forwarded to CGMA-HQ.
All details of financial counseling and debt management can be found in Chapter 3-C-6 of the CGMA Manual.
CGMA would also like to inform you that the Work Life Personal Financial Management Program (PFMP) provides many resources as well for debt management and financial education. Please visit www.uscg.mil/worklife/financial.asp for more information.
You give valuable time to assist CGMA clients and it is much appreciated!
Please let CGMA-HQ know (703) 875-0404 or toll free (800) 881-2462 or email: HQS-DG-CGMA@uscg.mil if there is any way we can support your efforts as you serve your shipmates through CGMA.