(Knoxville News-Sentinel, The (TN) Via Acquire Media NewsEdge) Jan. 1--Things around the offices at Consumer Credit Counseling Service of East Tennessee typically tend to slow down around the holiday season.

But things have taken a turn for the worst, and the need for financial advice has quickly risen to the top of the list. Demand for CCCS guidance, which ranges from budget counseling to debt management to bankruptcy counseling and financial education, are up. The nonprofit organization, headquartered in Atlanta, saw double-digit increases for services in 2008, an unprecedented amount of demand since first coming into the Knoxville area in 1973.

"If you asked if we have ever seen a demand for services like this before, I would say no," said CCCS East Tennessee President Daru Burdge.

Job losses, limited lending and huge increases in credit card interest rates have pushed the demand -- especially for housing counseling, which has quickly become the fastest growing line of service. Sixty-four percent more people signed up for housing counseling from January through August, the most recent numbers available, as compared to last year.

CCCS of East Tennessee is part of Consumer Credit Counseling Service of Greater Atlanta. Organization-wide, CCCS added around 250 jobs in the past two years just to keep up with increased demand for counseling services. The additions also have allowed for counseling to be available 24/7.

"We've had to literally double our staff to meet the demand," Burdge said.

Newly married and considering purchasing their first home, Eddie and Mallorie Mendence of Maryville recently signed up for CCCS's first-time home-buyer course. Similar classes are offered by several different organizations in the area. The free, eight-hour course outlines the home-buying process, dealing with mortgage loans, money management, closing costs and more.

"Since we have never been directly involved in buying a home, we want to learn as much as possible about the process," Mallorie Mendence said.

Apparently, more people feel the same way -- demand for education-type classes at CCCS spiked in 2008.

"Most of our other services would be considered crisis-based -- people that are already in trouble, a sort of fix on the back end. Our education program is aimed at preventing some of these problems," she said.

"Home ownership, for example, is more than buying a house, it's about keeping your house," Burdge continued. "We try to make people understand what costs really are associated with their home ownership, for instance, taxes, interest and mortgage insurance. The class walks them through the whole process all the way through the day of closing."

Likewise, foreclosure prevention counseling sessions at CCCS also have increased -- by 59 percent from January through August as compared to 2007.

That's demand Yvonne Hal of Knox Housing Partnership also is seeing. KHP offers several services for first-time home buyers, homeowners and renters, but Hall is receiving the most requests for foreclosure counseling, which it provides to clients for free. Like CCCS's housing counseling service, which deals with pre-purchase, mortgage defaults and loan delinquencies, KHP also tries to work out an agreement between the client and the lender.

Calls to the office for foreclosure advice, Hall said, have increased since January.

Also, pay attention to credit card statements, Burdge said. Credit card companies are raising interest rates and lowering limits, which is one reason more people are drawn into debt management plans, a reduced payment plan that allows consumers a way to pay down outstanding credit card debt. The number of pending debt management plans at CCCS jumped 258 percent in August compared to the same month last year. Pending debt management plans for Tennessee clients also has increased 265 percent from January through August as compared to 2007.

The plan does require a fee -- calculated at 7.5 percent of the client's overall unsecured debt -- but in Tennessee, that amount is capped at $20 a month. CCCS customers average about $23,000 in credit card debt.

Burdge advises people to be cautious and to ask a lot of questions when considering any kind of debt management program.

"They need to ask several things -- for example, how much will this cost me?" she said. "Some red flags might be a company can't tell you exactly what the fees are going to be on the front end."

As more people struggle to make ends meet, demand at CCCS is certainly expected to increase. Bankruptcy officials say filings in East Tennessee are up 30 percent from last year, unemployment rates in the state are hovering around 7 percent, and several people, while not having been laid off, are still facing a drop in income -- all things that can stretch already thin budgets to the breaking point.

"Of course, I think the spike in demand is in direct correlation to the U.S. economic situation," Burdge said. "But there's a variety of conditions coming together. (Credit card) interest rates are increasing as a result of the overall economy. So is the cost of food."

One trend in particular could be potentially troubling. CCCS also is seeing an increase when it comes to the average income of its clients. According to data pulled this year, the average net income, before taxes, was $27,008.87 for bankruptcy counseling, $33,781.06 for foreclosure counseling, $30,788.77 for budget and credit counseling and $32,736.60 for the CCCS debt management plan.

"To me the numbers show incomes of those seeking services are much higher than poverty level or higher than many would consider 'in need," " Burdge said.

And that could mean a busier than average 2009. At the very least, local financial counseling offices are ready for a hectic start to the New Year. "Mid- to late-January is usually when people get those credit card statements from Christmas and really start making appointments and calling for assistance or help," Burdge said. "With no slowdown before Christmas, we're really anticipating an extra-special January."

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Copyright (c) 2009, The Knoxville News Sentinel, Tenn.
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