basic counseling principles.pdf

BOOK ONE:

BASIC COUNSELING PRINCIPLES

NFCC Counselor Certification 2005V1

©2005 Copyright by the National Foundation for Credit Counseling. All rights reserved.

Book 1 - Basic Counseling Principles

Book One - Basic Counseling Principles

Table of Contents Page Number Chapter 1: Basic Counseling Principals NFCC Member Quality Standards 3 NFCC Counselor Code of Ethics 3 Roles of the Counselor 4 Distinguishing Financial Counseling from Financial Planning 6 Conflict of Interest 6 Confidentiality 6 The Counseling Process 6 Chapter 2: Communicating Effectively The Communication Process 10 Overcoming Barriers to Effective Communication 10 Verbal and Nonverbal Communication 10 Listening 11 Questioning Techniques 13 Pacing as a Response Technique 16 Four Steps to Communicating with Clients 17 Facilitating Client Communication During a Session 20 Chapter 3: The Counseling Relationship The Building Blocks of Counseling 21 Establishing Rapport and Trust 22 Making Referrals 22 Chapter 4: Diagnosing Problems and Understanding Client Values Diagnosing Financial Problems 24 Understanding Client Values 26 Cultural Values 27 Chapter 5: Crisis Intervention and the Need for Change The Sequence of a Crisis 29 Counseling Intervention to Diffuse a Crisis 30 Special Counseling Circumstances-Suicidal Threats from Clients 30 Dealing with Barriers to Change 31 Chapter 6: Life Events, Family Structure, and Financial Management Life Events 35 Counseling Clients at All Income Levels 36 Government Programs for Clients with Income Problems 39 Employment Issues 40 Non-Traditional Households 41

NFCC Counselor Certification 2005V1 1


Counseling the Transition from Marriage to Divorce 42 Financial Concerns About Divorce 43 Financial Considerations During Divorce 45 The Aftermath of Divorce 45 Gambling Addictions 46 Chapter 7: Counseling Effectiveness Analyzing Counseling Effectiveness 48 Characteristics of an Effective Counselor 48 Appendix Community Resources, Agencies, and Organizations for Referring Clients 50 NFCC Member Code of Ethics 55 NFCC Member Quality Standards 56



CHAPTER 1 BASIC COUNSELING PRINCIPLES

NFCC Member Quality Standards As a counselor you will work within the framework of the standards of the National Foundation for Credit Counseling (NFCC). NFCC member agencies and employees must abide by the NFCC’s Member Code of Ethics and Member Quality Standards which assure that clients seeking to achieve financial health are treated fairly and ethically. See Appendix: NFCC Member Quality Standards. NFCC Counselor Code of Ethics As a counselor, you are also expected to act professionally and with the highest standards. The NFCC Counselor Code of Ethics, listed below, outlines proper ethical behavior and standards for counselors. See Appendix: NFCC Member Code of Ethics. “Counselors will maintain high standards of ethical conduct and behavior in accordance with the objectives of the National Foundation for Credit Counseling, Inc. ®. Such standards include, but are not limited to, the following:

Integrity • Honest. • Fair. • Fiscally responsible in dealing with clients funds. • Consistent in word and deed. • Respect for the integrity of the client. • Promotion of the client’s best long-term interests. • Avoids situations leading to potential conflict of interest. • Maintains professional counselor/client relationship. • Conducts oneself in a professional manner at all times.

Competence • Strives for continuous improvement in oneself and the profession. • Acknowledges personal limitations. • Empathizes without being enabling. • Refrains from giving legal advice. • Refers to others when client’s problem is beyond the scope of one’s expertise. • Stays abreast of economic changes, creditor policies, etc. which will affect clients and the counseling process. • Provide proper documentation of cases. • Works toward and maintains certification. • Contributes to the professionalism of the field. • Holds the respect and cooperation of the colleagues.



Confidentiality • Respects Client’s privacy. • Provides information to those outside of the agency on a need-to-know basis with the client’s permission. • Handles client’s files with due diligence for safekeeping. • Takes considerable care in internal discussions to maintain client’s privacy regarding their situation and possible outcomes. Fairness and Objectivity • Unbiased and non-judgmental. • Serves as a reliable third party in the relationship between client and creditor. • Establishes Debt Management Plans when necessary based on the equitable treatment of creditors. • Provides clients information with which to make informed choices. • Recognizes and respects differences in client’s value systems, culture, and decision-making processes. • Non-discriminatory with regard to age, gender, race, creed, national origin, sexual orientation, social position or financial status. • Forthright in discussions pertaining to agency funding, policies and procedures, the services provided and fees charged.

Roles of the Counselor As a counselor, you play many roles in working with clients. Depending on each client's unique needs, you may be: • a change agent; • a source of support; • an educator; • a resource consultant; and/or • a preventive counselor. Change Agent In this role, you help clients work toward changing their income, expenditures, investments, methods of solving problems, and patterns of communication. You also help clients make changes to develop a positive self-concept as they deal with financial crises, establish financial priorities, make changes in plans for developing an economically secure future, make changes in debt management and make changes in the household budgeting system to improve control over family finances. In your role as change agent, you can help clients identify, acquire, and manage resources more effectively during times of transition. When clients are changing from one stage of life to another, or experiencing other transitions, you can work with them to clarify the resources needed and the decisions to be made. For example, clients experience transitions when financing a college education, going through a divorce, changing a job, or caring for elderly parents. In addition, you can help clients think about changing their resources, attitudes, lifestyles, and behaviors as they wean themselves away from credit or begin to reestablish credit at a prudent



level. You may provide information for generating and evaluating alternatives as your clients make decisions and plan for handling changes that will lead to economic security. Source of Support Clients look to you for support and understanding during difficult times or crises. You can empathize with a client's feelings about losing a job, being sued, not knowing how to handle finances, or being denied credit because of past mistakes. With your help and support, clients can learn to overcome fears, real or perceived, that would prevent meeting their financial goals. This requires that you have integrity, compassion, and good interpersonal relations, and show an urgent concern for the client's well-being. Clients in crisis can feel reassured by your assistance and your ability to help them relieve immediate stress. Some clients need the reinforcement and encouragement you can provide as they make decisions, implement plans, and work toward resolving problems or achieving goals. Because you are available to help and not to ridicule or make judgments, clients can feel more confident about disclosing personal information and discussing mistakes. Educator Many clients have problems because they do not understand the complexities of credit, the credit process, or the consequences of mismanaging financial resources. You can educate clients about how to budget, how to manage money and credit, and how to develop a workable system of household financial organization. Often, clients need to be shown that what they decide today affects their tomorrow. In your role as educator, you can also offer tips about consumer shopping skills and practices, including buying household goods, housing and transportation. Many clients need education about consumer rights and responsibilities as well as education about saving for short- and long-term goals. Some clients will also need to be educated about various financial services offerings, such as investments and insurance. Education can be informal or formal, through one-to-one counseling, group programs, media, internet, or volunteer programs. Resource Consultant Because of your experience working with clients who face a variety of challenges, you can offer many creative ideas and specific insights about finding and managing resources. In addition to assessing each client's available income, employee benefits, credit, and other financial resources, you can assist in identifying and drawing on the client's personal resources -- such as inner strength and special skills. Furthering your contacts within the community and referring to your organization's Community Resource Guide will enable you to suggest additional resources available to clients. Preventive Counselor Preventive counseling is used to guard against future financial difficulties and may take two distinct forms: immediate and long-range. Immediate help is required when an unexpected event occurs, such as an auto accident, illness, or death in the family. Preventive counseling helps to keep an individual from getting into excessive debt or helps by creating a realistic savings plan.



This type of counseling focuses on preventing pitfalls and maximizing the chances to achieve financial goals. The counselor can look for ways to encourage clients to save for emergencies and difficult times such as a layoff or an unexpected illness. Long range counseling can also help clients learn to set aside funds for regular future expenses such as car or home repairs, gift giving or vacation planning. Distinguishing Financial Counseling from Financial Planning The process and outcome of financial counseling is not the same as financial planning. Financial counseling through credit counseling organizations is primarily geared toward helping clients learn to effectively plan and manage current financial resources through budgeting, appropriate use of cash and credit, and disciplined credit repayment. Many financial counseling clients are already in a crisis when they seek agency help. The goal is to help clients resolve problems, become self-reliant, and make their own decisions without continuing counseling assistance. In contrast, financial planning helps clients evaluate their financial resources and set up a money management plan for reaching long-range life goals. According to the Certified Financial Planner website (www.cfp.net/learn/) the process involves assisting clients in gathering relevant information to help come up with a savings and investment strategy given the current financial situation and future financial needs of the client. Conflict of Interest A conflict of interest is a situation in which a counselor might jeopardize the rights or interests of a client through involvement or contact with someone else. It is important to avoid any potential conflicts of interest that may arise in a counseling session caused by your personal or professional relationships. If such instances occur, it is a best practice to refer such individuals to another counselor or a different agency. If you are unsure if a conflict of interest exists, discuss the situation with your supervisor. Confidentiality One of your most important professional responsibilities is to safeguard client confidentiality. You must never release any client information without written authorization from the client. Also, never discuss clients or specifics of cases outside of the agency environment. The Counseling Process The counseling process has six components which proceed sequentially. These are:

1) Diagnosing problems 2) Setting appropriate goals 3) Specifying Objectives 4) Generating and deciding among alternatives 5) Preparing action plans 6) Implementing and evaluating plans

For your agency’s specific counseling process, see your Statement of Counseling Services. The counseling process usually follows a circular rather than a linear path. This is because the sixth step, implementing and evaluating plans, can lead back to earlier steps if a progress check



shows that the results are not as expected. Then the counselor and client may decide to revise the diagnosis, reexamine goals and objectives, find new alternatives, change the action plan, or change the implementation. 1. Diagnosing Problems Before you can help your clients, you have to understand their financial circumstances and diagnose the problems that concern them. Gathering information about your clients' finances and problems is accomplished using questioning techniques, imperative statements, and other communication techniques. Each individual counseling organization has its own procedures regarding the information gathering process as a guide to summarize data about each client's financial situation. You also prepare a budget/spending plan to analyze the client's income and expenditures. As you continue to build rapport and trust during the counseling interview, clients will gain confidence and be encouraged to disclose sensitive concerns they may initially be reluctant to reveal. Without applying excessive pressure, you should probe for more details so you can get an accurate picture of what your clients face. 2. Setting Appropriate Goals Now that you and your client understand the situation and the problems at hand, you can move on to set goals that will lead to resolving those problems. There are two types of goals: process goals and outcome goals. The counselor is responsible for process goals, targets for building a productive relationship that will support the client in resolving problems and achieving desired goals. Clients are responsible for outcome goals, targets for getting out of problems and moving toward results they want to achieve. To be effective in guiding client actions and decisions, outcome goals should be specific, achievable, and measurable. Vague goals don't help clients plan decisions and actions. In contrast, a specific goal says exactly what a client expects to be able to do. If the goal is achievable, it will encourage the client to take action. However, if the goal is unrealistic, it will wind up discouraging the client. By setting goals that are measurable, the client can monitor progress and determine when the goal has been achieved. Goals, objectives, and alternatives should be developed in the context of a client's individual values. At times, your personal values may differ from those of your clients. Nonetheless, bear in mind that clients will be most strongly motivated to work toward goals and objectives and to select alternatives that fit with their values and life experiences. 3. Specifying Objectives Few people can achieve their goals right away, especially if the goals relate to long-range issues such as saving for a comfortable retirement or planning to fund a child's college education. For this reason, clients need to set interim objectives that will guide their behavior in the days, weeks, and months leading up to the time when they expect to achieve their goals. As with goals,



objectives must be precise, achievable, and measurable. The following examples are clearly stated objectives that clients might set:

• "I will decrease my living expenses by January 15th." (Ideally, client specifies a target amount for the decrease.) • "I will adjust my debt payments so that by March 15th my payments will be $100 less per month than they are now."

Such objectives act as milestones that show the client how far he or she has come toward the ultimate goal. Every time clients meet their interim objectives, they are that much closer to accomplishing their longer-range goals. This encourages them to believe in themselves and continue working toward their goals. 4. Generating And Deciding Among Alternatives Now that your clients know what they want to achieve and have set interim objectives for moving toward those goals, it's time to think about how they can accomplish the desired results. First, ask clients about possible alternatives they have been considering and about alternatives they have already tried. Wait to suggest additional alternatives until after clients have mentioned a number of ideas. In this way, clients begin to feel that they are regaining control and have the ability to resolve their own problems. At times, clients may seem resistant or offer objections to potential solutions. Under these conditions, you can only offer ideas and suggestions and allow the client to decide what course should be taken. You will want to stress to clients that no one solution is right for a particular problem. By coming up with a number of options, clients can consider a wider range of choices as possible solutions. Some research may be needed to help clients identify additional options. Also remind clients to consider the short- and long-term consequences of the various alternatives they generate. Although you will want to offer suggestions, ask pertinent questions, and mention the consequences of specific alternatives, remember that the decision is the client's alone to make. The goal in counseling is to help clients learn to handle financial decisions on their own. Only by learning to choose among alternatives, make sound decisions, and evaluate the results can your clients develop the skills they need to manage their financial matters without help. 5. Preparing Action Plans A written Action Plan based on the client’s particular needs is imperative to successful resolution of the client’s needs. Per the Council on Accreditation FMDC standards, an action plan will contain:

• Evaluation of the client’s need for services • Summary of the client’s financial situation including income, living expenses, debt, and

housing issues • Client goals and responsibilities



• List of the array of potential options available to the client, including bankruptcy as applicable.

• Developed with the client’s participation and a copy given to the client • Focused on timely resolution of the client’s needs and based on the urgency of the

problem and the length of time needed to achieve appropriate results To create a plan with the characteristics listed above, help clients determine the real cause of the problem and identify the resources that can be applied to solving it, including personal, family, and community resources. Next, work with clients to clarify their goals, their alternative solutions, and the criteria for deciding among their alternatives. Examples of general alternatives for clients to look at include options for increasing income, decreasing expenses, looking for ways to reallocate how debts are paid and identifying what assets are available to resolve financial concerns. After they have decided on a course of action, you can help clients plan action steps and set a schedule for taking those actions. Writing the action steps down with the client will help strengthen the proposed plan. Urge clients to take the lead in preparing action plans, so that they gain confidence and feel more commitment to carrying out plans. 6. Implementing and Evaluating Plans Positive and negative feedback come into play during implementation and evaluation. You can use positive, constructive feedback to reinforce continuation of client actions that lead toward goals. Even if a client has not taken every action in the plan, you can show support for the actions that were taken. You will also want to tactfully point out actions that move clients away from their goals. In this way, you can maintain a productive relationship with clients. Clients may need additional counseling at a later date to help them return to an earlier part of the process to revise the diagnosis, change goals or objectives, come up with other alternatives, revise the plans or change the way the plans are being implemented.



CHAPTER 2 COMMUNICATING EFFECTIVELY

The Communication Process The counseling process depends on clear, effective communication between counselor and client. Communication is the exchange of information to share meaning. In exchanging ideas, you and your clients can use both verbal and nonverbal communication. Verbal communication is the use of language, such as the words in a conversation or a letter, to share meaning. In contrast, sharing meaning through nonverbal communication involves the use of body language, voice qualities, and other methods, rather than words. The communication process has five basic steps:

1) The sender has an idea. 2) The sender formulates a message -- including information and/or emotions -- to share the idea with a receiver. 3) The message is sent through a medium, such as a spoken sentence or a written letter. 4) The receiver gets the message and understands its meaning. 5) The receiver responds to the sender by indicating that the meaning has been understood or by reacting to the content with a message sent in return.

Overcoming Barriers to Effective Communication There is more to sending and receiving a message than the mere exchange of words or gestures. As each individual comes from a different background, experience, or culture, different meanings are placed on the words expressed. A certain word used by the sender may arouse strong emotions in the receiver, preventing the receiver from grasping the sender's true message. "Debt," "budget," "bankruptcy," "welfare" and of course "deadbeat" are examples of such emotionally charged words. Be aware of your client's possible reaction to such words and be careful to select words that will express your meaning without triggering an emotional response that gets in the way of sharing ideas. A common difficulty with verbal communication is that most people can listen much faster than someone can speak. A person speaks at an average of 125 words per minute. Since listening occurs at roughly 400 words per minute, there is a strong tendency to think ahead of the person who is speaking. In a counseling situation, the counselor may wrongly assume that he or she knows what the client is going to say, or may think ahead, lose track, and then fill in with his or her own assumptions. Verbal and Nonverbal Communication Facts, figures, and information are easily expressed through verbal communication. On the other hand, feelings, emotions, attitudes, biases, and prejudices are often conveyed without words, using nonverbal communication. Nonverbal communication takes place through posture and



body position, facial expressions, voice inflection and tone, rate of speech, gestures and mannerisms, and body movement. Some elements of body language are used consciously and deliberately, including gestures such as handshakes, waves, and smiles. But often counselors and clients are not aware of other actions that communicate a message nonverbally, such as tight muscles, raised eyebrows, clenched fists, faster breathing rate, and the space or distance between themselves and others. Even when people are not consciously aware of these signals, they may still be receiving and responding to the nonverbal messages from the sender. You will also want to keep the steps of the communication process in mind as you work with clients. Avoid the barriers that prevent sharing of meaning by making a special effort to be accurate and consistent in conveying your message. Also train yourself to be more perceptive and alert to the subtle messages that your clients are sending during an interview. Listening Listening is the process that links the sender and the receiver in the communication process. Both client and counselor need good listening skills, because a real exchange of ideas can occur only when each listens to the other. Effective listening helps forge a closer relationship between the counselor and the client, allowing them to work together successfully. When you actively listen, you do more than simply hear someone else's words. Active listening is actually a five-step process: Step 1. Attend to the person who is speaking by focusing on his or her words and nonverbal signals -- and screening out any other sounds. You can use posture, eye contact, and other nonverbal signals to show the speaker that you are paying close attention when conducting an in-person counseling session. Step 2. Interpret the verbal and nonverbal cues being sent by the speaker so you can grasp the meaning. During telephone or Internet counseling sessions, be aware of pauses in the conversation and/or omission of information. Step 3. Remember the message, especially the significant details you may need to help the client later. Step 4. Evaluate the message to determine whether it is complete and accurate. Step 5. Respond to the sender's message by offering feedback. Feedback shows that you have received and understood the sender's meaning. It also continues the two-way flow of information that is critical to establishing and maintaining a good counseling relationship. In a counseling situation, you will want to listen and react with empathy and compassion. Clients -- especially new ones -- may feel nervous, discouraged, humiliated, or have other strong emotions that are not verbally expressed. Therefore, be aware of what may be happening under the surface as people speak.



Barriers to Active Listening Eight suggestions for overcoming barriers to effective listening (from Dr. Ralph Nichols): Barrier 1. Hop-skip-jump listening. Because people can think faster than speakers can talk, a counselor may inadvertently begin to daydream or drift into other thoughts while the client is speaking. Suggestion: You can overcome this barrier by using the extra listening time to concentrate on what is being said and relate it to what the client said earlier in the session. Barrier 2. Fact listening. Listening for facts alone can be confusing and cause you to overlook information about the client's attitude and disposition. Suggestion: Concentrate on identifying the client's main idea and on the feelings the client is expressing so you can address key issues and concerns. Barrier 3. Emotional deafness. Emotionally charged words and phrases (like "deadbeat") can stir up the listener and interfere with the exchange of ideas. Likewise, deeply held opinions or prejudice will negatively influence good listening. Suggestion: To overcome this, learn to recognize your emotional reactions and make a strong effort to put them aside as you listen. Barrier 4. Premature dismissal. When you believe that you know what the client is going to say before it is said, you will prematurely tune out the client's message. If you do this, you may be missing important details. Suggestion: You can train yourself to avoid jumping to conclusions and hear the client out. Barrier 5. Facade attention. Sometimes counselors may act as if they are listening and interested, but they are not really paying close attention to their clients. This is often apparent to the client. Suggestion: Show respect for your clients by giving them your full attention. Barrier 6. Uncritical inference listening. In this case, the counselor listens to what the client is saying but makes illogical leaps or faulty inferences not warranted by the facts. Suggestion: At appropriate times, summarize your interpretation of what the client has said and ask the client to confirm or correct your interpretation. Barrier 7. Yielding to distraction. Communication is disrupted when a counselor permits office routine, phone calls, staff interruptions, or other distractions to interfere with the counseling interview.



Suggestion: Show courtesy toward your clients by minimizing the possibility of distractions. Barrier 8. Pencil listening. Note-taking seldom improves listening. You may become so involved in writing that you miss what the client is saying. Although notes are sometimes necessary, be careful that this does not interfere with effective listening. Suggestion: If you must take notes, jot only a word or two to jog your memory so you can complete your notes after the session is over. Tell the client that you may jot a note or two so that you don’t forget something that you want to come back to. Positive Listening Habits To build a strong working relationship with a client through effective listening in an interview, you will want to develop the following six habits:

1) Limit your talking to half or less of the time spent with a client; 2) Be alert to the client's verbal and nonverbal signals; 3) Listen for understanding, not to prepare a rebuttal; 4) Mentally reconstruct the client's problem as it is being discussed to reinforce your understanding and clarify key points; 5) Concentrate on the client, not on your personal thoughts; 6) Mentally analyze and evaluate the client's points, sifting fact from opinion.

Offer internal summaries (briefly recapping ideas in the middle of a conversation) to confirm with the client that you understood what was being said. Review and summarize at the end of the session to confirm mutual understanding of what was communicated and what happens next. Questioning Techniques During a counseling interview, you can use two major types of questions to elicit information about a client's situation, challenges, values, and goals. Primary questions are key questions that help you bring out significant information. Secondary questions are probes used as follow-ups to explore vague or incomplete responses to primary questions. Primary Questions Among the types of primary questions you can ask in a counseling session are:

1. Closed-ended questions 2. Open-ended questions 3. Hypothetical questions 4. Leading questions

A closed-ended question is phrased to obtain a specific, limited response from the client. Examples of closed-ended questions:

• “How old are you? “ • “What is the name of the collection agency?”



Closed-ended questions are helpful when you want a brief, concise response and when you want to reduce the amount of irrelevant information offered by the client. In some cases, a closed-ended question is phrased so that the client can answer with a simple yes or no (or true/false). Alternatively, the question can offer multiple choices for the client to consider. However, closed-ended questions seldom elicit in-depth information. If overused, this type of questioning can lead clients to feel like they are being interrogated. It can also turn into a rapid-fire approach where the questions and their responses occur too rapidly for the counselor to properly absorb the information. In contrast, an open-ended question is worded so it does not structure the client's response. Examples of open-ended questions: • “What seems to be the problem?” • “What are your concerns about garnishment?” Such questions provide the client with a great deal of freedom to respond in any manner. As a result, you will often learn a great deal by allowing clients to answer questions in their own way. However, open-ended questions are not particularly time efficient. A hypothetical question is used to set up a theoretical or role-simulation situation for the client to consider when responding. Examples of hypothetical questions: • “If you were in my position, what would you do?” • “What do you think would happen if you were laid off?” Some clients find hypothetical questions motivating, challenging, and insightful. Used skillfully, these questions can elicit certain information or evoke client attitudes that are not easily reached through questioning techniques. At the same time, hypothetical questions can be time consuming. They may also be stressful to the client. A client may feel threatened by such questions if they are introduced too early in the interview, or if it they present a hypothetical situation to which the client cannot readily relate. Leading questions (also known as loaded questions) are worded in such a way as to imply the expected answer, which tends to bias the client's response. Examples of leading questions: • “You certainly aren't thinking of skipping the court appearance, are you?” • “You didn't believe what he told you, did you?” Leading questions can be used as a device to elicit a reaction from the client when other questioning techniques do not seem to be effective. They can also be used to encourage the client to volunteer information that goes beyond the questions asked. However, such questions generally influence or distort the responses, positively or negatively. Also, leading questions that are emotionally charged can create a stressful interview environment, produce invalid responses,



or provoke client anxieties. Secondary Questions Once you have used primary questions to uncover key information, you may need to follow up by asking secondary questions to find out more. Types of secondary questions are: 1. Clarification probes 2. Mirror or reflection questioning 3. Internal summary questions 4. Hypothetical probes Clarification probes are questions used to clarify an abstract or incomplete response to a primary question. Examples of clarification probes: • "How do you think the home equity loan you just mentioned can help you?" • "Can you give me an example of how your family has tried to reduce expenditures in the past?" With a clarification probe, you are trying to find out more about the client's thoughts and feelings concerning the topic being discussed. However, starting one of these questions with "Why . . . " can cause a client to feel defensive. So can a judgmental attitude, conveyed by your tone of voice or facial expression. Therefore, be tactful and sensitive when phrasing clarification probes. With mirror or reflection questioning, the counselor repeats back to the client a word or phrase used in response to a previous question that needs further explanation. An example of mirror or reflection questioning:

Counselor: “Will you be able to make your house payment?” Client: “I should have enough to pay the house payment.” Counselor: “You will have enough money on payday to make the house payment.”

Although it can be quite effective, you should use mirror questioning sparingly. You don't want to sound like you're merely parroting the client's answers over and over. Internal summary questions contain a short summary of what the client has stated up to a certain point in time, as a way of eliciting additional information. An example of an internal summary question: Counselor: “Have you called the medical billing company to request a payment plan?” Client: “Yes but I haven’t been able to afford the amount that they want me to pay.” Counselor: “The amount they wanted you to pay was more than you could afford?” Client: “That’s right. They wanted $100 every two weeks.”



In addition to encouraging the client to elaborate, internal summary questions allow you to check whether you have correctly understood the client's answers. Hypothetical probes, which set up theoretical situations for clients to consider, can be helpful when clients have difficulty relating to your primary questions. Example of a hypothetical probe: Counselor: “Do you ever purchase items at the grocery store that you don’t really need?” Client: “Yes, I probably do. My children often go along and request expensive junk food.” Counselor: “What if you found a neighbor or friend to watch your children while you shopped so you could more easily stick to your weekly food budget?” Hypothetical probes invite the client to assume a different role or imagine a different situation and then respond. However, if overused, such probes can make clients feel uncomfortable or uncertain. Use this technique sparingly, because it can sound too clinical or phony if overused. Imperative Statements During a counseling session, you can draw clients out through the use of imperative statements, simple sentences designed to elicit more information, clarify meaning, and encourage client participation and reaction. Examples of imperative statements: Client: "I can't seem to manage my money." Counselor: "Tell me more. . . or Please expand on that. . . or Give me more detail. . . or Please elaborate on that. . . or Go on. . ." Imperative statements demonstrate your interest in what the client is saying while indicating that you need more information. When you use an imperative statement, match your tone of voice to the situation, sounding firm but not dictatorial. Pacing as a Response Technique You can lay the foundation for a good working relationship with your clients by responding with verbal, nonverbal, and written pacing. Pacing is a method of periodically adjusting the counselor's behavior to that of the client. Pacing techniques can be used to convey warmth and acceptance and create the atmosphere of trust that is necessary for counseling to succeed. Three specific verbal pacing techniques are: 1. Restating 2. Paraphrasing 3. Summarizing Restating is repeating what the client says but with emphasis on specifics of content. This is a mirroring strategy that focuses attention on a particular thought or feeling and encourages the client to further analyze or explain what he or she has said. Examples of restating:



Client: "We make good money but have nothing left at the end of the month." Counselor: “It sounds like you don’t feel like you’ve got enough money to get you through the month.” Client: "These creditors are really upsetting me!" Counselor: "They really upset you?" A second way in which counselors can verbally pace is through paraphrasing. Unlike restating, where you use the same words as the client, paraphrasing takes the essential content and puts it into different words. When you paraphrase, be careful not to add or subtract words that may communicate a different meaning. Examples of paraphrasing: Client: "The many bills I receive in the mail every day are driving me crazy and my husband will not help and would not come with me today." Counselor: "You seem to be struggling with bill paying and it's creating family pressures." Client: "Insurance is so expensive. Look how much we are spending on family life insurance." Counselor: "You feel you should reevaluate your need for life insurance now." Both restating and paraphrasing allow you to clarify a client's messages. Neither adds new information, but both show understanding and lead to more thorough and meaningful discussion. This can help build a mutual trust between counselor and client. Summarizing serves the same general purpose as restating and paraphrasing, but it is especially useful when a client has talked for an extended period explaining his or her situation. At this point, there is a need to condense the client's statements and ideas. Summarizing also helps bring a segment of the conversation to a close in order to provide more time for discussion or to end the session. Also, summarizing can be helpful for the client in reviewing what needs to be done at the next session or some later session. Examples of summarizing: Counselor: "So far, we have defined a number of financial problems. Now we can explore some alternatives to solve these problems." Counselor: "We have discussed your financial difficulties and considered several possible solutions. Let's review those solutions and discuss your decisions." Four Steps to Communicating with Clients 1. Detecting client's feelings and attitudes 2. Overcoming resistance 3. Helping client’s focus 4. Offering feedback During a counseling interview, clients may attempt to put their situations in a positive light. They may say only what they think you want to hear, or omit information which they think might cause you to refuse services. They will offer excuses as to why they have not been financially



solvent or financially reliable in the past. They may be defensive and rationalize, particularly in the early stages of the first interview. Some may attempt to cover up their real feelings, including anxiety, concern and worry. Keep in mind that clients may not appear to be completely honest, but what they are telling you may be true from their perspective. The counselor needs to accept that clients will have anxiety about talking about their financial problems and be careful not to appear judgmental. This will allow clients to open up as they become more comfortable. 1. Detecting Client's Feelings And Attitudes During an in-person counseling interview, how can you get a sense of what a client is feeling? Nonverbal cues often signal a client's inner state. The client who sits erect and looks comfortable is probably relaxed. When someone leans slightly forward, it indicates attention is being paid and there is interest and involvement in the counseling session. The client who slouches or seems to be drawing away from the counselor may be indicating disinterest, lack of trust, or boredom. Frequent changes of position may indicate discomfort, lack of interest, or possibly unexpressed anger. Facial expressions are also indicators. The client whose face appears frozen in one expression may be exhibiting fear, anxiety or anger. If the client glares or stares constantly at the counselor, this could indicate anger or hostility. Eyes roving all around the room may indicate disinterest. Eyes downcast and rarely meeting the gaze of the counselor may indicate shyness, shame, anxiety, or fear. Some clients may cry during their session and the counselor can reassure the client that financial problems are upsetting to everyone. Direct eye contact with the counselor usually indicates that the client has a positive and concerned attitude toward solving the financial problem. As you know, voice patterns, tone, volume, and pitch of voice also reveal feelings. These voice cues are especially important during telephone counseling since other nonverbal cues are not available. The client whose tone is very loud or shouting may be indicating anger or hostility, while the client whose tone of voice is soft may be shy or fearful. Stress may raise the pitch of the voice and a high-pitched voice may indicate anxiety, fear, or anger. A low-pitched voice suggests either comfort or strong control of emotions. If the pitch of a client's voice begins to rise or starts to quiver or break, it may be that the client is about to cry. 2. Overcoming Resistance Regardless of what approaches and techniques you use, the attitude of the client may prevent you from having a productive counseling session. If a client is exhibiting severe resistance, you can try these techniques: • Permit the client to vent his or her feelings before continuing with the counseling session. • Use active listening skills to detect what is below the surface so you can respond appropriately. • Redirect the discussion to a less threatening area and plan to return to the more emotional topic at another time. Knowing when to back off is important if you want to



build a good relationship with your clients. Politely confront the client by calling attention to the fact that he or she might be avoiding or resisting certain areas of discussion. 3. Helping Clients Focus You can help clients focus on key topics under discussion and take responsibility for themselves during the counseling interview by modeling appropriate communication techniques. During the course of counseling, a client may be dealing with one or more of eight common emotional themes: 1) Clients may feel unique or different because of their financial problems. 2) Clients may generalize their anxieties about financial issues into a pervasive anxiety about everything in their lives. 3) Clients may be depressed about their financial concerns. 4) Clients may experience general confusion about their ability to solve financial problems. 5) Clients may have unrealistic financial goals or an unrealistic view of the world. 6) Clients may feel inadequate to solve their financial problems. 7) Clients may be frustrated with themselves and/or others related to their financial situation. 8) Clients may believe that change is beyond their control. With focusing, clients learn to deal with their own issues and the underlying emotional themes. One way to encourage this is to ask clients to use the first person singular and plural ("I" and "we") rather than referring to an unspecified third person plural ("they") or talking vaguely about "people" in general. Also, urge clients to use present tense verbs rather than past tense verbs when referring to continuing behavior. This encourages a focus on what the client is doing now and reinforces the idea that the client can take control of a situation. You will also want to point out inconsistencies, ambivalence, and distortions in client communication and behavior as a way of increasing responsibility and movement toward problem resolution. Through focusing, you can help clients concentrate on the underlying issues, understand that they are able to resolve their financial problems, and prepare to take steps and make decisions that lead to economic security. 4. Offering Feedback In the course of counseling interviews, you will have the opportunity to provide feedback that helps clients examine their behavior and measure progress toward achieving their goals. Positive feedback lets clients know that their behavior is consistent with their goals. This kind of feedback gives them encouragement to continue moving in the same direction and, once goals have been achieved, to set and work toward new goals. Negative feedback is used to alert people that their behavior is not consistent with their goals. This helps clients consider the limits of behavior related to achieving their goals and see how far



they have to go to accomplish what they want. The purpose is to provide constructive information that will allow clients to see how to refine their behavior in order to move closer to their goals. In offering feedback, be careful to discuss the client's behavior rather than the person. By referring to what people do, you avoid sounding judgmental or critical. Keep your personal values, feelings, needs, and wants separate from those of your clients. Clients will resent you if you appear to be judgmental, condescending, or controlling. The most effective approach is to concentrate on what is important to your clients and look for ways to express your willingness to help clients achieve their goals. In addition, make your feedback specific, confining yourself to comments about current behavior and actions under consideration. Although people can't change what they have done in the past, they can change what they do in the future, once you bring the consequences to their attention. Facilitating Client Communication During a Session In some counseling sessions, you will face the challenge of helping a husband and wife communicate with each other about family financial problems. Each may have a different view of the problem, different priorities, and different solutions. In this situation, often the only way to get agreement is to let each person have a say while instilling some objectivity. Note that you, as a counselor, serve only as a facilitator and not as a decision maker. You smooth the way toward better communication so that clients can see their problems more clearly, have a meaningful discussion about potential solutions and then work out compromises about how to proceed-without placing blame.



CHAPTER 3 THE COUNSELING RELATIONSHIP

The Building Blocks of Counseling As you start counseling a new client, you will need to jointly work on six specific elements that are the building blocks of a productive counseling relationship. These are: 1. Openness 2. Realistic expectations 3. Structure 4. Enabling/Empowerment 5. Confirmation of differences 6. Mutual involvement Openness describes a willingness to offer information, including facts and relevant personal thoughts and feelings. Openness applies to you as well as your client. You can set the tone for the relationship by modeling openness. You can put clients at ease by mentioning that you have experience working with other clients who faced similar problems. You can also offer suggestions about options to be considered. Realistic expectations are important from the very start. Clients may not understand what they can realistically expect from the counseling relationship. Take some time during the first session to help clients recognize that you will offer ideas and guidance but you cannot take control of their financial situation or make decisions for them. You can also help clients gauge the reality of the specific goals they set during counseling. Structure comes from establishing the proper setting and goals for the relationship. This allows you and your clients to work together to help the clients solve their problems, achieve their personal goals and become more economically secure. Exploring means uncovering client issues and concerns, thinking about goals and investigating the cause and dimensions of client problems. Understanding involves generating alternatives, evaluating these choices, and coming to a decision about which option to choose. Acting is the final stage of the counseling relationship, in which the client follows through on the chosen alternative and implements plans to resolve issues and achieve goals. Evaluation helps you and the client determine whether the actions taken are effective or whether there is a need to return to an earlier stage for further exploring or understanding. Enabling or empowering is the ability to influence clients through your communication style, specialized knowledge and expertise, and understanding of the counseling process. Your goal is not to control clients but to assist them throughout the counseling process in a positive way as they generate and consider alternatives, think through the consequences of each possible action,



and work toward achieving their goals. Confirmation of differences acknowledges your clients can have views, values, and goals that are not the same but are still equally valid. Throughout the counseling relationship, you need to keep your personal values, beliefs, and attitudes separate from that of your clients. Mutual involvement fosters cooperation between you and your client to make the counseling relationship productive and satisfying. You can't be responsible for making decisions for your clients. You are available for ideas and support, but your clients should not become overly dependent on you. What you can do is to urge your clients to cooperate by becoming actively involved in setting goals, making plans to meet them, and implementing those plans. Establishing Rapport and Trust The first few minutes of any counseling session are important for setting the tone for a productive relationship with clients. This is when you start to establish rapport, encourage trust, and generally put the client at ease. In this way, you help the client feel more comfortable in disclosing all the financial details and decisions that are relevant to the current situation. Without mutual trust, respect and involvement, the counseling relationship is unlikely to result in an effective resolution to the client's problems. Making Referrals During a counseling relationship, you may be dealing with a wide variety of client issues and concerns. You and your organization will be able to handle many of these, including issues related to credit delinquency, concerns about home equity or consolidation loans, repossessions, imminent foreclosure or mortgage default, and methods of reestablishing credit. At times, however, a client or family may require additional help with one or more specific issues, such as: • abuse

• housing concerns • legal services • health concerns • problems with consumer products • mental health issues • family conflicts • divorce • gambling

• addictions When you are thinking about referring clients to other agencies or groups, be sure you understand the services that these other organizations provide. Use the appendix provided in the back of this book to help get you started as you seek out local referrals for assisting clients. Because financial difficulties are often part of a complex set of family and life circumstances, having clients get assistance in other need areas of their lives is often critical to the client’s ability to successfully tackle their financial issues.



Many communities may also be served by telephone referral centers that clients can easily access by calling 211 on their telephone. Whenever you make a referral, you become part of a network of specialists working with a client family. In such a situation, you will want to separate roles and clarify the division of responsibility.



CHAPTER 4 DIAGNOSING PROBLEMS AND UNDERSTANDING

CLIENT VALUES Diagnosing Financial Problems As you know from your work with clients, financial management can be a problem for all kinds of people in all life stages. Having financial problems can worsen marital or family discord, as well. However, what appears to be an obvious problem is often merely a symptom. The real reasons for financial trouble may not be readily apparent without a diagnosis based on careful collection of data and an understanding of client behavior, values, and attitudes. Debts (and other concerns) are frequently symptoms of financial problems. In your counseling sessions, you will be helping clients distinguish between symptoms and problems so they can plan for changes that will resolve the problems. Causes of Financial Problems The following are basic causes of financial problems that reflect a need for the client to plan and change attitudes or behavior: 1. The conflict between expanding desires and limited income. Even families with rising incomes may have expectations and expenditures that rise faster still. Expanding desires are prompted by many things, including peer pressures, advertising, boredom, and increased availability of income. To combat this problem, families can set spending priorities and then budget accordingly. 2. The conflict between the present and the future, between needs and wants, between security and comfort, and between achievement and risk. All families have to come to terms with a healthy balance among these conflicting elements. An imbalance can threaten the family's ability to manage its finances successfully today, tomorrow, and in the long term. 3. The emotional meaning of money. Clients may not be aware of the emotions underlying their use of money. These include using money to buy friendship or to express love, impulsive spending, using money to control others, making up for past deprivation, gaining prestige, and so on. These hidden meanings of the use of money may involve a power struggle over control of family resources. 4. Lack of control over or expertise in money management. Clients may not be able to control the family's finances for a variety of reasons: inadequate math skills, lack of knowledge about consumer rights, lack of experience with or knowledge about financial accounts, lack of access to or control over a second checkbook or other credit cards in the family, or inability to recognize the danger signs of credit overextension. 5. Inadequate income or savings to meet family needs, especially unexpected expenditures. A family may be able to live on a certain level of income for some time, then have problems when



that income is reduced or eliminated due to cutbacks, unemployment, or business failure. The addition of children to the family can increase expenditures, just as can other life changes. The wage earners may lose their self-respect or the respect of relatives if they feel they cannot provide a certain lifestyle for the family. 6. Personal values, attitudes, and behavior. How a client feels and acts can directly affect his or her employment possibilities, ability to meet goals through appropriate budgeting, need to avoid risk and gain better economic security, and handling of money matters. Values and attitudes about money, lifestyles, family roles, etc. can influence a client's financial decisions and actions. 7. Lack of communication. When family members can't or won't communicate about money, this is usually a symptom of more basic problems in the relationships. Of course, some clients may not have good communication skills, which can affect their ability to cooperate with other family members in preparing and implementing financial plans. Probing for more information will help you determine whether a basic communication problem is the cause of financial troubles and allow you to think about appropriate referrals if needed. 8. Overestimation of income and underestimation of expenses. Some people do not want to know how much they actually make or spend, while others may not know because of poor record-keeping. The reason behind the client's behavior should be identified so the client can take steps to regain control over financial matters. As you listen to a client's presenting or stated problem and start to formulate questions and statements that will elicit further information, be alert for the underlying cause(s). Remember that clients may be unwilling at first to discuss sensitive issues, so you may have to concentrate on building trust to encourage disclosure of such information. The Diagnostic Process The presenting or stated problem is only the starting point for identifying the real cause of a client's problem. The first step in the diagnosis process is to gather as much data as you can about the client's financial situation and the symptoms of the problem. Next, you will have to identify the underlying problems at the root of the client's trouble. Having a client admit responsibility for a problem is not as important as having a client assume responsibility for solving it. Therefore, if the subject of blame arises, you may want to remind clients that uncovering the real reason for a problem is important, but blaming someone for causing that problem will not help solve it. This reminder may also reassure a client who feels guilty for causing a problem and has been unable to get past the guilt to make needed changes. It can be helpful to restate the problem(s) until you and the family members come to consensus on what needs to be resolved. Then, once the nature and extent of the problems have been clarified, you need to help the client rank the problems to determine which should be tackled first. Some less-severe or less-urgent problems may have to wait while the client resolves more pressing problems. Problems that entail priority debts such as mortgages must be handled as



quickly as possible because of the potential for disrupting the family's security. Understanding Client Values The choices people make and the actions they take are influenced by their values. As a result, understanding your clients' values can help you diagnose their problems and contribute to shaping suitable plans for resolving those problems. Each person has his or her own value system, and each finds it a useful way of approaching the world. Values can change over time, as the individual is influenced by interaction with the environment. Since values affect both attitudes and actions, you need to have a clear idea of a client's values before you can help diagnose problems and generate alternative solutions. Understanding expectations, money management, and the analysis of priorities and lifestyle are some of the techniques you can use to clarify your understanding of a client's values and see how these values relate to the client's financial problems, goals, and potential solutions. In the process of this clarification, your clients will come to a better understanding of their own values and the influence on their behavior. Understanding Expectations • Ask what the client expects to gain from counseling. • Ask what skills the client has and what the salary a client expects from a potential employer. • Ask, "Where do you want to be in 5 years? In 10 years? In 25 years?" • Ask what the client primarily wants to do or have. Money Management • Ask, "If you had a million dollars, what would you do with it?" Examine the client's checkbook register and/or tax return to see how money was used. • Ask what could be cut out of the family budget and what would happen if some items were not purchased. Analysis of Priorities • Ask, "Which expenditures do you consider necessities and which do you consider luxuries?" • Ask, "Which expenditures do you feel must be made now and which do you feel can wait?" • Ask family members to work separately in ranking the expenditures in the family budget and then compare their answers. Lifestyle • Discuss the client's plans for the weekend. • Ask, "If your workplace (or school) were closed for a day, what would you do?" • Ask if the client would take a job that means more income but less time for leisure or the family. • Ask if the client would take a job with higher status or higher income than that of another family member.



Money is a powerful tool. It is a medium for acquiring status, recognition, and control, plus many of the essentials and luxuries of life. Money also has many symbolic meanings as a way of expressing love, anger, jealousy, power, success, attachment, and so on. Lack of money, of course, has many negative meanings and effects, including those that can be life-threatening. Therefore, counseling is bound to be affected by a myriad of economic, social, and psychological family concerns which, to one degree or another, will influence all aspects of the counseling process and outcomes. During the counseling interview, you will be able to get a sense of what money really means to each client. In all your interviews, therefore, it is important to look below the surface at each client's underlying attitudes toward money; relate these attitudes toward client values, needs, and goals. Then help clients prepare to change inappropriate attitudes so they can achieve their financial goals. Cultural Values Communication with your clients also carries with it the responsibility for the counselor to be aware of cultural differences that the client may bring to the counseling session. As you counsel individuals with diverse cultural backgrounds, you need to be aware of how cultural diversity may affect understanding of attitudes toward money. This may include understanding trust and mistrust of the following:

• Financial institutions. • Insurance. • Federal and state assistance programs. • Saving. • Using cash rather than credit. • Credit and its use. • Borrowing and lending. • Legal issues in dealing with finances. • Purchasing alternatives for major items like autos and homes.

According to an article in “Managing Diversity” September 1995 these are eight tips that can help you improve communication with clients who represent a different culture or who speak English as a second language. Slow down. If you’re from New Orleans and have worked in Boston or vice versa, you may already know how difficult it is to understand what someone is saying. With these differences just in the United States, imagine that it can be twice as difficult for a different ethnic group. As you speak, check in with the client from time to time to see if he/she understands what you are saying. Watch for facial cues and body language that indicate understanding, recognition, or utter perplexity.



Use basic vocabulary. Most experts agree that today’s average US reading comprehension is at the fourth grade level. So, this is a tip that applies to everyone: always use words in their most common meaning. Choose words with the smallest range of meanings wherever possible. Say what you have to say in several ways. Repetition is the mother of learning. By giving your message in a variety of words and images, you will help a listener or reader understand. However, be careful not to overwhelm the receiver with too many versions. Ask the client if he/she understands your meaning. Avoid slang. If you ask the question, “Where are you coming from?” the answers you receive may include the name of a person’s home town or his or her last travel destination rather than the reasons why he just said what he said. “Are you into movies?” may get a quizzical look rather than an answer. Think about how you phrase a question before you ask it. Also, avoid unfamiliar word pictures. (“Blow your mind” is a good example.) Be careful with humor. Humor and jokes, while a staple or our communications, frequently depend on intricate nuance of language. What is funny to someone born and raised in this country may not be at all comical to a member of another culture. Expect delayed reactions. When people are listening in a second language (or you are speaking in one somewhat imperfectly), expect delayed reactions. It simply may take longer for your listener to process what you said. Be patient for audience reactions and questions. Don’t assume their experiences are your experiences. Talking about your experiences, feelings, and reactions can be an effective way to win over a listener in a conversation. However, talk about these experiences as your own and as a member of your own cultural group. Then, ask if their experience is different and how so. Listen to and accept their perceptions, values and feelings even if they are not the same as yours. For example, in some cultures, the banking establishment may be less trusted. Your acceptance and gained understanding of this during your time with the client will help you allow the client to find options with which they personally are comfortable. Use the opportunity to learn about another culture. Clients may be more respectful to you if they see that you are truly interested in them.



CHAPTER 5 CRISIS INTERVENTION AND THE NEED FOR CHANGE

The Sequence of a Crisis Many of the clients who may come to you may be in some state of crisis. A crisis may be precipitated by a catastrophic illness; sudden change in employment status; sudden change in marital status due to divorce or a spouse's death; or another major, unexpected change in the client's life that threatens to disrupt financial stability. Most people go through stages in the process of recognizing a crisis and preparing to diffuse it. Being aware of the normal sequence of crisis events can give you a better understanding of the emotional state of the client, a sense of the impact of what may have already taken place, and an appreciation for what may be expected in the future. A crisis is a situation requiring:

• Change and/or reevaluation of priorities, or • Change in assumptions about self and how to operate in the particular system, or • Outside help to manage the problem or to prevent a detrimental effect on self

and/or property. A crisis can become an opportunity for growth and positive change rather than a disaster. The Chinese characters for the word "crisis" are composed of two parts -- danger and opportunity. With your help, clients can come to see that they will be stronger and more capable after they have resolved their crises successfully. The following illustrates the seven phases many clients move through in a financial crisis. As you read about each phase, think about examples from your counseling experience and consider what your clients were thinking, feeling, and doing in that phase. 1. Precipitating event. This is the unexpected occurrence that threatens the client's financial stability. 2. Recognition of precipitating event as threatening. In this stage, the client realizes that the family's finances may be endangered as a result of the event. The situation becomes more urgent. 3. Emotional reaction. Once the client realizes the danger, he or she may react emotionally, expressing shock, disbelief, or some other outcry. Not every client expresses an emotional reaction, however. 4. System maintenance. After the emotional reaction comes a response that helps the client soften the impact by denying the danger, displacing attention to avoid dealing with the crisis, projecting the problem or the cause elsewhere, delaying response, or simply feeling numb to avoid feeling anything.



5. Disorganization. A client may feel disoriented as he or she begins to absorb the fact of the crisis and the urgency of the threat. In this stage, clients commonly experience signals of distress such as chemical abuse, over-eating, over-spending, and anxiety; they may have a lower attention span and be unable to think clearly or make clear decisions because of confusion or bewilderment at being overwhelmed by the crisis. 6. Acceptance. As the disorganized stage peaks and clients come to accept the crisis and the urgent problems they face, they are ready to make changes so they can diffuse the threat. In this stage, clients begin to move toward stability by setting priorities, choosing among alternative solutions to solve their problems and learning from the crisis so they can better manage their personal finances. 7. Resolution and stability. In the final stage of a crisis, the client has resolved the threatening problems and regained stability. Now the client can move ahead to maintain the solution as long as needed and gain strength and confidence to deal with future crises. Counseling Intervention to Diffuse a Crisis In a counseling interview, once you recognize the need for crisis intervention, you can start by specifically stating and defining the crisis. Facts are important, so work calmly to obtain information and highlight important details that reveal the problem and the urgent threat. Be accepting without being judgmental. Offer emotional and educational support. Through this process, the client gains comfort that helps to alleviate the immediate stress and emotional pain. During the counseling session, help clients see how they can redirect energies to generating alternatives that will solve the problems. Encourage goal-directed and constructive actions to give a sense of self-control. Also help the client think ahead to anticipate the future course of a crisis. You can assist by identifying the resources that are available to be applied, including personal and family as well as community and government resources. Once the client is ready to move forward, you can encourage the development of an action plan and a schedule. Be aware that the client's motivation to solve the problems and/or his or her unwillingness to accept solutions can impede the process. For instance, the client may have to choose between the lesser of two evils -- a foreclosure or bankruptcy. Many times there are no "good" alternatives, but a choice must be made nonetheless. In some cases, clients may need to be made more uncomfortable with the situation to motivate them to act. You then become the source of discomfort by pointing out the directions the problem will take and the consequences of not making a decision at all, so bear in mind that this may color the clients' reactions to you and to your ideas. Special Counseling Circumstances -- Suicidal Threats from Clients At times it is possible that a counselor will have a meeting with a client who feels so overwhelmed by his/her situation that suicide seems to be a very real alternative in dealing with the present frustration. While such a client does not present very often, a very hopeless client can state a feeling that suicide is an alternative. It is important that counselors have a basic plan to help the client find alternatives.



The first clue to a client’s suicidal ideation comes from the client. The client may express hopelessness, frustration, a feeling of intense isolation and loneliness. Or the client may make a comment, which expresses a feeling that they “can’t go on” or “would be better off dead”. When a counselor hears such comments, he/she should be immediately inquisitive about the client’s state of mind regarding suicide. It is generally wise for the counselor to immediately address any client comment about suicidal thoughts. This can be done directly by simply asking the client how serious he/she is about suicide as an alternative. In most cases, the client will respond with statements indicating that, even though he/she occasionally thinks of killing him/herself, he/she would never actually do it. At this point the counselor can return to the subject at hand but to keep monitoring client statements regarding hopeless feelings. In a few cases, however, the client may state that he/she is seriously considering suicide. If this is the case, the counselor should ask questions concerning the intention to do so. If the client reports serious intent, every attempt should be made to have the client call a mental health professional. The client should be given a 24-hour help-line number available in most areas or the client can be encouraged to call 911. If the client is currently under the care of a mental health therapist, he/she should be encouraged to call the therapist. If the client approves, the counselor could connect the client with the help number or therapist’s office or emergency number during the counseling session. In evaluating the risk of suicide, there are four components to be considered. These are: Ideation, Means, Intent, Plan. If the counselor hears vague references, which seem to indicate the presence of suicidal ideation (thoughts), the client should be asked directly about each component. The presence of all four components (ideation, means, intent, and plan) generally means that there could be a danger of suicide and client statements should be taken seriously and addressed during the counseling session. There is a lower risk of suicide when only the ideation is present, but there is not plan, means or intent. In summary, some clients can be very distressed. Financial problems are difficult to share with friends or relatives. This can make a person feel quite isolated and alone. Some clients have other mental health and life issues contributing to the thoughts of suicide. If a client states suicidal thoughts, the counselor needs to be prepared to offer an appropriate response to get the client to a skilled therapist or mental health provider. Dealing with Barriers to Change Almost everybody resists change, because change means giving up familiar patterns and having to learn new ways of doing things, which can be uncomfortable. Even when the consequences of not changing are extremely serious, clients may resist change. However, the need for change can be positioned as an opportunity to learn new skills, gain new experiences and insights, move closer to attaining goals and become more skilled in problem solving.



In a counseling situation, your role is to be supportive of your clients as they confront change. Help them clarify their own values, goals, and priorities as they consider their alternatives and prepare for changes that will lead to economic security. Stated barriers to change, which are mentioned by clients during the counseling interview, may reflect rational thinking, whereas unstated barriers often reflect emotional responses, mistaken thinking and beliefs, or anxiety about the change. As you read through the following seven hypothetical situations, think about how the counselor's sample response relates to both the stated and unstated barriers to change. Notice that the common thread is to reassure the client that the crisis can be resolved. The responses also offer the client hope for an improved economic future, which provides motivation for making real changes now. 1. Easing Of Crisis As A Barrier To Real Change Client tells counselor: "I really want to change.” Unstated barrier in client's thoughts: "I have just bought more time. Now that the creditors are off my back, I can continue to do whatever I want." Sample counselor response: "You may be off the hook this month and maybe next month, too, but unless you make changes, your outstanding debts will catch up with you. Remember that your credit report will reflect your failure to repay credit obligations for seven years. Or, if a worse emergency arises or wonderful opportunities come along, you will not be able to handle them.” As the counselor, you are the expert in knowing what the potential consequences to the client’s choices and in your role as counselor, it is important to discuss the potential longer term consequences to the client’s actions. 2. Past Deprivation As Barrier To Real Change Client tells counselor: "I have worked so hard or have been so victimized that I deserve something for me.” Unstated barrier in client's thoughts: "I must make up for past deprivation, working so hard, and sacrificing for other people for such a long time." Sample counselor response: "I know that you do deserve rewards and that you have worked hard. I also think that you deserve to be in control of your own affairs, to be master of your own finances rather than be controlled by indebtedness or other problem. You have achieved success in so many areas of your life. Your finances are yet another area for you to master. You have succeeded so much that you seem to have no fear of failure; you think that you will not be hurt by your finances. However, do not set yourself up for failure. You can manage your financial matters if you try." 3. Need For Personal Control As Barrier To Real Change Client tells counselor: "I think I should do such and such." Or client is silent when discussion turns to generating alternatives.



Unstated barrier in client's thoughts: "I can do whatever I want to do. No one is going to tell me what to do." Sample counselor response: "You can do whatever you want to do. You have the right to make your own choices. As a counselor, I have the responsibility to show you the consequences of your choices. I would not be doing my job if I did not warn you of the possible consequences of various choices. It takes more effort and concern for me to explain consequences than to just let you make choices without being informed." 4. Lack Of Control As Barrier To Real Change Client tells counselor: "I need a budget. Will you give me a workable budget?" Unstated barrier in client's thoughts: "I cannot control my finances. I spend more than my income," or "I am in trouble with my creditors," or "I am scared because of overwhelming costs," or "I cannot say no to my children." Sample counselor response: "Up until now, how have you handled your finances? Where do you feel that your spending is out of line? Out of line with what? Who is spending ..., how much ..., for what ... or whom? Let's write down your expenses, analyze them, and then set up a financial plan or budget with a format and system for control, geared to your need and personality so it will work better for you." 5. Immediate Needs As A Barrier To Real Change Client tells counselor: "I cannot save now. I have too many expenses. I am just trying to survive now." Unstated barrier in client's thoughts: "Why should I save for the future when it is so uncertain and I am so anxious about meeting my family's needs today? We need the money now." Sample counselor response: "Drastic changes in lifestyle now are necessary for life security throughout your later years. You will feel more secure if you save now so you can take advantage of an opportunity or diffuse an emergency later. Statistics show that everyone will have a crisis at one time or another, of one type or another -- and these crises can be resolved by having a financial reserve. Financial independence comes from planning, saving, and sacrificing now so that you have choices later. Otherwise, you will soon have fewer -- or no -- choices." 6. Hopelessness As A Barrier To Real Change Client tells counselor: "I do not think this plan will work . . ." Unstated barrier in client's thoughts: "Why try? Nothing ever works out right anyway." Or: "I really do not want to take the effort to change myself, someone else, or anything else." Sample counselor response: "Maybe the plan will not work -- that is true. The plan will certainly not work if you do not try. But the possible outcome from taking the risk of improvement offers more opportunity than the increasingly negative consequences of doing nothing."



7. Family As Barrier To Real Change Client tells counselor: "Planning a budget is really a good idea. I like it, but my spouse and/or kids will never go along with the plan." Unstated barrier in client's thoughts: "Why risk a battle with my family to make a budget and stick to it? They don't want to change, so trying to budget is a waste of time. Also, I cannot say no to my children. I am afraid they will not like me or will leave me if I do not give in. I do not want them to think poorly of me." Sample counselor response: "You can take a leadership role in your family. Have a meeting. Explain your idea and the need for a budget with definite amounts for a specified period of time. Allow your family to react as you listen without making judgments or interrupting. Elicit cooperation by asking each person how he or she can contribute to the family income and to resolving the problem. You can present this as a challenge to their creativity. Ask for their ideas until the family is able to come to agreement and decide to implement one or more appropriate ideas. Communication about money can be learned and practiced. Expect resistance to change, but be persistent. Do not say, 'We cannot afford this or that', but rather say 'If we choose this, we cannot have that.'"



CHAPTER 6 LIFE EVENTS, FAMILY STRUCTURE, AND

FINANCIAL MANAGEMENT Life Events As a counselor, you will work with people whose life situations vary widely. Key life events such as getting married, having children, preparing for higher education for oneself or children, establishing a career, becoming divorced, remarrying, and preparing for retirement can have a profound effect on a person's financial concerns, goals and use of resources. Regardless of the structure and composition of the client family–traditional or nontraditional couple with or without children, single adult, single parent--you will start the counseling process by understanding the client's individual situation and the influence of life events on that client's economic attitudes, behavior and consumption patterns. Once you have determined the life events and financial challenges that shape a client's situation, you can help the client think through his or her short- and long-term goals, learn about effective money management skills, weigh alternative solutions to pressing problems, and plan for future economic security. Each client is unique, and not every individual will experience every life event. For example, some people may never marry, yet they will inevitably face retirement issues. Some clients need help financing college or graduate school for themselves or their children, or will be coping with outstanding debts from higher education. Divorce can also change the course of an individual's life. Single parents may be concerned about child support issues; remarried clients may have to manage income to cover expenses for the new family, as well as for a spouse or children from a previous marriage. Regardless of marital status or family structure, a client may require counseling for employment problems and for help in planning for financial security after retirement. Many life events affect family structure, in turn influencing the way a client manages household finances. As you come to know more about a client's life situation, you will be better able to determine the appropriate approach to take in resolving that client's financial issues. The next sections offer an overview of challenges related to life events and family structure, including specific financial challenges and opportunities that a client may face. Some life events will require many of the following skills as a client adjusts to the changing conditions of his or her life and finances. Depending on the client’s individual situation and family structure, a client may need to:

• Establish financial independence and self-reliance; • Develop smart shopping skills to buy and maintain household goods; • Balance a checkbook; • Handle credit;



• Establish a good credit history; • Sign contracts to rent an apartment; • Apply for a mortgage; • Obtain insurance: life, health, auto, real and personal property, disability, and/or long-

term health care; • Save money to prepare for future independence and retirement; • Adjust from being single to being part of an economic partnership; • Make financial decisions about work, income, and family rearing; • Deal with divorce, death, and/or changing health needs; • Manage financial resources in good and difficult times; • Manage childcare expenses; • Maintain an adequate emergency fund or build a fund for children’s education or job

training; and/or • Plan for retirement and estate needs.

In addition to assisting clients as they deal with financial change that is a normal part of life, certain life periods may require special attention to financial matters. For example, seniors may face chronic health care issues that add to their expenses. To supplement income, seniors can explore resources such as:

• Reverse mortgages; • Deferred loan plans; • Federal home equity conversion plans; • State home equity conversion plans; • Homeowner equity accounts; and/or • Renting out part of the housing.

Counseling Clients at All Income Levels As a counselor, you will meet with clients at varying levels of income. Families at all income levels can face financial difficulties. These problems can stem from:

• Lack of knowledge about the mechanics of financial management; • Disagreements over family finances; • Employment problems; • Excessive use of credit; and/or • Lack of control over spending.

Regardless of income level, lifestyle is a major influence on the way everyone approaches money matters. Income and lifestyle affect how clients behave and what they need from counseling. The specific challenges and priorities of lower income families frequently differ from those faced by middle or higher income families. It is important to understand how a client's socioeconomic background is linked to income and to lifestyle. With this understanding, you can adjust your counseling techniques and inquiries to the specific needs of your clients.



The way your client perceives and manages financial matters may be quite different from the way you handle your own finances. You should avoid being judgmental and applying stereotypes when working with any client. Each client is different and, although a client's values and priorities may not match your own, you should respect the client's viewpoint and understand what is and is not appropriate, given that client's situation. Credit and financial counseling is based on the belief that people can:

• Develop a sense of control; • Accept responsibility; • Believe that behavioral changes are necessary.

It is important to set the tone for a counseling relationship that is empathic, accepting, respectful, sincere, and honest. Remember, however, that change comes slowly. After you have established a climate of trust and support, you can introduce a variety of ideas and tools for clients to use in resolving the immediate problems and getting on track toward reaching identified goals. One of your most important functions is to demonstrate to clients that they have options. A client can control his or her attitude toward financial matters. Any client can learn to adjust his or her lifestyle, think creatively about increasing family income, and develop a realistic budget for the entire family. You can help your client recognize that every action taken toward controlling expenses, repaying outstanding debts, or increasing income is a step toward future economic security. Higher Income Families Higher income families can experience severe financial problems. They may:

• Misunderstand complex financial instruments; • Have lost income; • Make ill-advised investment decisions; • Have secured or unsecured debt; • Have not considered negative consequences of changes in tax laws.

However, higher income clients often have assets they can liquidate or borrow against to make some or all of the most urgent payments. In addition, these clients may carry insurance that cushions against problems such as medical disability. You may find some higher income clients somewhat overwhelmed by and ashamed of money worries. They may be concerned about how financial problems will affect their status in the community. Many have become accustomed to a certain lifestyle and a competitive corporate environment. Having less money to spend in keeping up appearances can be a particularly severe emotional blow. Therefore, the higher income client will want your reassurance that his or her case is being handled confidentially. Higher income clients may also be especially susceptible to pressure from collectors. They are likely to do whatever is needed to relieve the feeling of humiliation at being unable to meet their obligations. They want to get over these feelings quickly, so you'll find that many enter counseling seeking fast solutions.



Middle Income Families Middle-income clients come to counseling for a variety of reasons, such as:

• Lost income; • Unexpected bills; • Major expenditures; • Tax consequences; and/or • Overspending or the over-use of credit.

Even when there are two wage earners in the household, middle-income families may overestimate the amount that will actually be contributed to the family budget. This can occur because the family fails to consider the increased expenses relating to two jobs (such as additional transportation costs, higher taxes, and child care expenses). The family may fail to consider how withholding will affect each paycheck and how the dual incomes will affect their combined tax situation. Middle-income families may also face the family and time pressures that result in failure to balance monthly income and expenses and, in some cases, heavy reliance on credit cards to handle emergencies. The counseling process will help such families identify and achieve family money goals. Lower Income Families Families may have low income for a variety of reasons, including:

• Irregular or seasonal employment; • Loss of employment; • Employment at low paying jobs; • Reduced or no benefits; and/or • Tightened eligibility requirements for assistance programs.

How is the category of lower income families defined? The poverty index only considers a family's cash income and does not take into account non-cash benefits such as food stamps, public housing, or Medicaid. The index is adjusted annually based on inflation and is used as a guideline to determine eligibility for some federal assistance programs. Transitional poverty describes middle-income people who are temporarily in the lower income category and expect to move back to the middle-income level in the future. Some people move in and out of the lower income level according to the number of dependents they are supporting. As a result, middle-income couples who have one or more children may become lower income families while the children live at home. Later, when the children are financially independent, spending is reduced and the empty-nest couple is once again in the middle-income category. Lower income families often deal with these problems:

• Their cash reserves are low or nonexistent. • They live from paycheck to paycheck, with no savings. • They lack insurance so aren't reimbursed for losses due to fire or another

calamity.



• They may not be able to find a low-cost bank account, so may handle their finances by using payroll check-cashing services, payday loans, pawnshops and/or rent-to-own shops, and/or by buying money orders when payments must be mailed.

Government Programs for Clients with Income Problems One of your priorities as a counselor working with clients who have income problems is to find community resources to diffuse immediate financial crises and provide assistance for ongoing needs. You may also want to help clients find out about earned income credit and other tax-related benefits that are applicable to their situation. Social Security and SSI are federal programs that make monthly payments to survivors, retired, elderly, blind, and/or disabled people who have limited income and resources. Some people who are eligible for these programs do not participate in them because of:

• Pride; • Lack of information; • Fear of filling out application forms; and/or • The erroneous belief that they are not qualified.

With your counseling, clients can overcome such concerns and take steps to utilize community resources and other available programs Many government programs available to assist your clients have been changed under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996; the act covers Medicaid, Supplemental Security Income (SSI), food stamps, child welfare, and child support. The welfare-related provisions of this law set a 60-month lifetime limit on receipt of federally funded assistance under the Temporary Assistance to Needy Families (TANF) law. This law also changes the assistance available for legal immigrants, allows Medicaid entitlements for children and parents who meet specific income and asset standards, and restricts the types of disabilities that enable children to qualify for SSI benefits. Under the TANF law, unemployed individuals between the ages of 18 and 50 who have no minor children will generally be able to receive food stamps for only three months in any 36-month period. However, the three-month limit doesn't apply until after states have officially notified recipients of this provision, and states can request waivers under certain circumstances, such as high unemployment (over 10 percent) in a given area. The new law also allows states to make substantial changes to their food stamp benefits. Childcare programs, which are of particular concern to working parents, have been changed under the TANF legislation. States cannot penalize families with children under six if the parent is unable to work or join a training program because of lack of affordable childcare. However, states may still impose a time limit on that parent's access to aid.



You will want to review each client's eligibility for individual programs, be sure that clients understand applicable rules and time limits for receiving benefits, and continue searching for alternatives to help clients as they resolve their financial difficulties. Employment Issues Job loss is another major life event that many clients may be experiencing when they seek counseling. Few people today will find themselves working at just one job or for one employer throughout their working lives. Most clients will probably change jobs, voluntarily or involuntarily, at some point, which can affect their management of family finances. Some of the reasons for involuntarily changing jobs include:

• Being laid off due to downsizing programs; • Being fired; • Being part of a restructuring due to changes in required job skills.

If a client is unemployed involuntarily, suggest that he or she apply for unemployment compensation even if he or she is not sure they qualify. Some clients may qualify for unemployment compensation because they were fired due to discrimination or for another reason. Also, a client may want to check with a legal services office or with a union office if he or she was fired without appropriate cause. A client who has been unemployed for some time may have to rethink employment goals and start over in a new job or a new industry, sometimes at a level that is below the previous level. The prospect of starting over can be troubling to many people. As a counselor, it is important to acknowledge the difficulties the client faces. Urge the client to remain positive and focused on goals, even if the new job is not the ideal job. Over time, he or she will gain the confidence and skills needed to succeed in the new job and perhaps become eligible for other, better-paying jobs that require these new skills, this moving closer to achieving his or her long-term work goals. One way a client can ease financial pressure due to unemployment or underemployment is to consider whether another family member might take on additional employment. One of the parents or another member of the household may want to start to work or find an additional part-time job. Before taking this step, the client should decide how much more money is needed to meet expenses and the additional number of work hours per week needed to earn that amount. Urge the client to consider additional costs such as child-care that come about as a result of employment, and find ways to minimize them. Also, a client should examine transportation alternatives and the schedules of family members, and think about how to redistribute household chores so housework is more evenly spread among family members. In preparing to look for a new job, your client should start by conducting a self-analysis of skills and goals, thinking through what he or she wants from his or her working life. The client needs to identify jobs and employers, investigating jobs and job openings in a systematic way.



He or she should seek help from state and private employment agencies, temporary employment agencies, technical colleges and other community resources to prepare for new employment. Many resources will provide testing and “practice” interviews to provide additional assistance to the client. A client may need to rethink goals and priorities. What would he or she like to be doing in a year, in three years, and in five years? How might the family situation change, and what impact could the changes have on employment goals? What are his or her short-term and long-term goals and priorities? What impact would these goals and priorities have on the client's current job search and future employment plans? Next, a client should begin to systematically explore job possibilities and prospective employers. Remind the client that, during this period, finding a job is the job. He or she needs to take some steps every day toward finding out which industries, jobs, and employers make sense for his or her particular skills and goals. A client should recognize that only a small percentage of job openings are advertised in newspapers or listed with employment services. Nearly three-quarters of all jobs are filled through personal contacts. Therefore, the client should “fan out” and talk to everyone he or she knows--relatives, friends, schoolmates, customers and suppliers, doctors and dentists, religious leaders, club members--about the job search. One of these people may hear of an appropriate job or know someone at a local company that has just started hiring. By making personal contacts and following up on leads, your client increases the odds of identifying suitable jobs and getting invited to interviews. Non-Traditional Households Along with life events, family structure is another important aspect of each client’s financial picture. Key life events and family structure affect the way people live, work, spend money, and plan for the future. Many clients seeking counseling are living in non-traditional households. Some examples of non-traditional households include:

• Single parent families; • Blended families; • Widow and widower households; • Couples living together; and/or • Gay and lesbian couples.

The problems that face non-traditional households may affect the way you approach the counseling process. Single Parent Families Counseling single parent families provides its own set of challenges. Areas of concern may include:

• Work and child care expenses; • Transportation; • Dealing with the emotional issues; • Time demands to balance family and job;



• Issues related to dealing with the other parent; • Visitations; and/or • Child support.

Blended Families Blended families include family members from two different households now sharing a common living environment. The two families may have different attitudes and values relating to money and non-money issues. If one family moves into the other family’s dwelling, there may be feelings of conflict as to space and ownership. Emotional issues may arise and you might suggest family counseling to resolve them. Your responsibility as a counselor is to help the family deal with money issues and attitudes. A parent may feel that the money he or she earns should be spent on “his or her” children rather than “their” children. You may also observe conflict in spending patterns, values, priorities, etc. You should try to get the family members to agree on what is important to them. Widow and Widower Households Losing a major wage earner in a household is devastating and the surviving individual may have to make some major changes that affect the family. If the surviving spouse has been involved in the financial decisions of the household, the transition with be easier. If not, you will need to educate the survivor on the basics of running a household. Some of the things to consider in this situation might include:

• Checking to see if the family is eligible of benefits under Social Security. • Checking financial institutions for savings, deposit accounts, etc. • Checking safety deposit boxes or safes for life insurance. • Checking credit card statements for disability and death benefits. • Checking with employers about life insurance benefits and retirement accounts. • Checking with employers regarding ongoing health insurance options. • Checking with insurance agents. • Contacting an attorney for assistance.

As a counselor, you will see clients whose life events have led them to make sometimes-expensive decisions to resolve current problems. Part of your job as a counselor is to help clients analyze the true cost of past decisions in a non-judgmental fashion so that as they move forward, they can build on their personal knowledge to resolve current problems and make the best possible choices in the future. Counseling the Transition from Marriage to Divorce People who decide to separate or divorce have many new adjustments to make in order to move forward financially. Each has to rely on his or her own income, which means adjusting to a different income level. Property may be divided and living costs will increase as the spouses prepare for living in separate households. With separation, divorce, and/or remarriage, the focus is on adjusting to the changes brought about by the new family structure. Stress and financial pressures are common problems for



people who are separated, divorced, or remarried, especially when children are involved. Resolving the financial issues stemming from these major life events can be complex. Divorce can have a definite effect on the financial well being of husbands, wives, and children. As a counselor, you are in a unique position to help clients think about the decisions they make in handling family resources during the transition from marriage to divorce and after a divorce is final. By injecting sound resource management principles into the process, you can help clients avoid poor decisions and actions that can threaten future economic security. Helping clients learn about goal setting, considering alternatives and consequences, analyzing costs and benefits, budgeting, and controlling family finances will benefit them during and after the divorce. It is also important that clients consider the legal and tax aspects of divorce. Complicating the transition from marriage to divorce are issues related to the client’s emotional state attitudes toward money, self-concept and job situation. Your emotional support and objectivity can be helpful to clients who must consider their alternatives and the consequences. Financial Concerns About Divorce Strong emotions surface before, during, and after divorce. These emotions affect the client's cooperation with the spouse (and the counselor) and his or her ability to take action or make appropriate financial decisions. Planning for divorce requires help because an economic and emotional partnership is being dissolved. You can help clients undertake a cost/benefit analysis of the impending divorce and understand the lifestyle adjustments that will have to be made. The standard of living generally changes after divorce. Some studies show that the living standard falls for women and children, while divorced men are better off financially. You will want to encourage clients to look beyond current income and expenditures. Unforeseen circumstances and progression through life stages can dramatically change both income and expenditures. Some people have difficulty in projecting future changes in expenditures, especially costs related to child rearing. When considering divorce, a client should prepare a list of assets and gifts acquired before and during marriage and indicate which spouse owns each. Titles on property may need to be transferred so that the property does not have to be liquidated for equitable distribution. In addition, each spouse's non-monetary contributions should be documented, and special contributions--such as work that enhanced the value of the house--should be noted. Savings (in separate accounts) may be needed for the period of transition. Job skills and secure employment may also need to be assessed before divorce. Joint credit accounts should be closed or legal responsibility transferred to one spouse. Be sure that the spouse's name is legally removed from credit contracts and credit cards for which that spouse is not responsible.



Once the decision to divorce has been made, you will want to help your client plan rather than panic. During a divorce, people may make irrational decisions due to an impulse to express hurt or frustration with the other spouse or because of an urgent desire to accomplish the move quickly, without considering the impact on the future. Since some people in this time of crisis lose confidence, ability to function, and self-control, your involvement can help your client make better decisions and regain a positive self-image. A client may need your help identifying decisions to be made, ranking them in priority or chronological order, finding information needed for each decision, and investigating available resources. Although many people in the divorce process tend to be focused on what has happened in the past and present, you need to help the client think through decisions that will affect the future. The decision to divorce dissolves the economic partnership. In preparation for this, you can work with your client on the following issues: Income, Credit, Child Support and Alimony, Assets, Insurance, and Housing. Income: Income considerations begin with a definition of what is income (current and projected), and who has contributed to income. Credit: Divorcing couples need to be informed as to proper handling of credit obligations. Debts: A divorce decree does not eliminate debt obligations that were established during a marriage. Child Support and Alimony: The arrangement of child support and alimony payments should be discussed with an attorney, since many spouses fail to receive these payments as planned. An annuity trust is an alternative to alimony. If possible, the child support or alimony agreement should call for a check, recording, and enforcing system. In many cases, child support (and alimony) may be paid through the court, and wages can be garnisheed. If payments are in arrears, arrangements can be made to deduct these from assets liquidated at a later time, such as after the sale of the home. A number of other remedies may be available as more states strengthen their laws in this regard. Remind your client that the division of responsibility for debts is only enforceable by the divorce decree and between the couple. If payments are not made when due, creditors will try to collect from the person or people who signed the contract. In many states, marital law may effect the collection activity and divorce agreements. You should check state laws to see if they are applicable. Assets: Assets and property are considered in combination with income for equitable divorce settlements. If a premarital agreement is in place, this can guide the division of assets and property. If not, general guidelines are that assets and property acquired prior to marriage or after decree of separation need not be shared with the spouse. Equity and reasonableness should be used in dividing assets and property acquired during marriage through joint effort. Usually the



couple can do a better job of dividing household items than the court. Insurance: Spouses should arrange for "stop-gap" insurance, insurance on the ex-spouse, and continuation of health insurance benefits. One ex-spouse can own the life insurance policy on the other to protect child support payments and other projected expenses. Housing: The couple should have the family house appraised for its actual fair market value, and should compare the currently monthly mortgage payment and interest rate to the interest rate and monthly payment to be made on an alternative home or rental. They should also examine current real estate market conditions and what might happen to the value of the house if it is sold at a later date. This is important because some custodial parents remain in the family home while the children are minors. In addition, urge divorcing clients to think about the tax benefits inherent in their mortgage payment when arranging their finances prior to divorce. Generally, some portion of the monthly mortgage payment is returned as a tax benefit. Financial Considerations During Divorce Counselors cannot provide legal advice but can be ready to provide referrals to local community legal referrals. When working with a client who is involved in a divorce, be sure to emphasize that the lawyer hired by one spouse serves as that person's legal advocate and the executor of legal documents that protect that individual's legal rights. Couples therefore should not share the same attorney, even when this arrangement would appear to save money, because such an arrangement prevents the attorney from taking an advocacy role on the part of either spouse. Encourage your client to do research and interview before choosing a lawyer, including investigating fee structures for handling a divorce. He or she should be sure to understand what services are provided for that fee, what expenses will be billed, how fees and expenses will be billed, when and how payment is to be made. Also, for tax purposes, the client should ask that attorney bill separately for fees related to the divorce rather than mix divorce fees with fees owed for investment and tax advice or other services. Another form of legal divorce help is called mediation. Mediation is a process in which two parties voluntarily work through a conflict with the help of a neutral third party, who helps them negotiate and satisfactorily resolve disputed issues. Mediation empowers both spouses in a divorce situation to learn to communicate more effectively and to take responsibility for resolving disputed issues on their own. It also encourages a higher degree of cooperation so that the final resolution allows spouses to maximize their gains and minimize their losses while protecting their children. The Aftermath of Divorce Divorce can leave economic as well as emotional scars. After a divorce, one or both spouses may be very angry and may tend to use any weapon available to hurt the other, including money. If one spouse refuses to cooperate in paying child support or alimony, the other may be forced to find work (at any level) to cover basic expenditures. Resentment can build in such a situation, interfering with the spouses' ability to communicate when necessary about family issues.



If a client is not receiving support or alimony payments as scheduled, you may want to help him or her investigate the possibility of having support payments made through the support registry of the courts. This insures that payments are made regularly and provides legal documentation when they are not. Your agency may have additional information about methods that other clients have successfully used to collect support. In adjusting to divorce, your client may have to find new resources, be flexible and modify goals or develop new goals to deal with the reality of the situation. He or she can seek support from your agency as well as from other community or social resources, informal support groups, friendships, and relatives. This is a time when a client can set a new life course and regain financial control. Managing resources can move your client toward economic security in the future. In general, federal law requires that states establish and maintain a child-support program to assist residents. Most states have adopted a set of rules to assist the courts in determining child support payments, including medical support obligations. In addition, many states have procedures for withholding income to collect court-ordered child support. Check your state's laws for details. Federal law also provides for collection of past due child support payments by intercepting federal income tax refunds. Since only Attorney General Child Support Enforcement cases are eligible, custodial parents must apply for an IRS intercept through the nearest Attorney General's office. There may be a fee involved and the process can be time-consuming, but this may be a workable option for a client who hasn’t been receiving child support payments as agreed. Consult your local Attorney General's office for more information. Gambling Addictions Many clients or family members of clients are affected by gambling additions. Recognizing the signs of a gambling problem and referring a client to appropriate resources are important counselor skills when helping a client address problem gambling. The following information comes from Gambler’s Anonymous (www.gam-anon.org). Gamblers Anonymous offers the following questions to anyone who may have a gambling problem. These questions are provided to help the individual decide if he or she is a compulsive gambler and wants to stop gambling. Twenty Questions

1. Did you ever lose time from work or school due to gambling? 2. Has gambling ever made your home life unhappy? 3. Did gambling affect your reputation? 4. Have you ever felt remorse after gambling? 5. Did you ever gamble to get money with which to pay debts or otherwise solve financial

difficulties? 6. Did gambling cause a decrease in your ambition or efficiency?



7. After losing did you feel you must return as soon as possible and win back your losses? 8. After a win did you have a strong urge to return and win more? 9. Did you often gamble until your last dollar was gone? 10. Did you ever borrow to finance your gambling? 11. Have you ever sold anything to finance gambling? 12. Were you reluctant to use "gambling money" for normal expenditures? 13. Did gambling make you careless of the welfare of yourself or your family? 14. Did you ever gamble longer than you had planned? 15. Have you ever gambled to escape worry or trouble? 16. Have you ever committed, or considered committing, an illegal act to finance gambling? 17. Did gambling cause you to have difficulty in sleeping? 18. Do arguments, disappointments or frustrations create within you an urge to gamble? 19. Did you ever have an urge to celebrate any good fortune by a few hours of gambling? 20. Have you ever considered self destruction or suicide as a result of your gambling?

Most compulsive gamblers will answer yes to at least seven of these questions. Because gambling is a recognized addiction, referral of the client for outside assistance is usually a proper course of action, though some organizations may employ on-site help for clients with gambling issues. Some clients have been successful in using the Debt Management Program to repay debts in conjunction with individual and group therapy for gambling.



CHAPTER 7 COUNSELING EFFECTIVENESS

Analyzing Counseling Effectiveness Just as clients need to analyze the results of their decisions and actions and prepare to make changes where needed to get back on track or to improve. Counselors also need to analyze the results of their work with clients. There are two broad areas to consider, process and outcome, when conducting this analysis. The Process Perspective From a process perspective, this analysis helps you focus on the steps you took in the course of helping clients make plans to solve problems and achieve goals. In this analysis, you look at the effectiveness of what you and your organization did to help clients overcome their difficulties. The Outcome Perspective From an outcome perspective, you can look at whether the planned change has occurred in the client's life. The outcomes of a completely effective counseling encounter would show that actions chosen by the client and reinforced by the counselor achieved the goals set, that needs had been satisfied and problems solved. Characteristics of an Effective Counselor As you think about outcomes, you can develop criteria for analyzing the effectiveness of counseling from your client’s perspective. You can use criteria such as: making steady progress toward financial goals; finding or maintaining steady employment, education or retraining; and increased ability to meet payment obligations. Other criteria for evaluating outcomes from the client's perspective include: assessing changes in communication patterns among client families, increased cooperation among family members, and the expressed financial satisfactions and dissatisfactions of family members. What makes an effective counselor? Effectiveness in any specific counseling situation depends on what is needed to resolve the issues of each individual client. In general, however, the counseling literature suggests that an effective counselor should be compassionate, nonjudgmental, and a good listener so he or she can focus on what clients are saying and then help clients clarify and achieve their own goals. Working with clients requires good communication skills and patience as well as the ability to think creatively, juggle multiple priorities, and work well under pressure to solve pressing client problems. Above all, counselors need to maintain a positive attitude, which inspires client confidence and offers hope that the counseling process will lead to improved economic security in the future. Outstanding counselors go even further by following these criteria. Think about how you fit against these criteria as you plan your professional development needs.



Leadership in counseling, and professional development:

• Counselor demonstrates professional and ethical behavior and has made unique contributions to the agency's counseling program.

• Counselor uses innovative approaches to counseling, including the ability to motivate clients, design budgets, analyze problems and objectively evaluate options.

• Counselor is dedicated to continuing professional and personal development by participating in training or educational opportunities.

Community involvement: • Counselor acts as an advocate of the agency and helps increase the visibility of

the agency within the community. Professional development: All counselors need professional development to maintain their certification, to support their agency's goals, and to improve their own skills. As part of professional development, you will want to think about your personal and career goals and see how you can achieve personal growth within the framework of your agency responsibilities. As you plan your professional development, you will want to keep current with issues surrounding consumer credit, household finances, overall economic trends, legislative and regulatory changes, and other concerns and trends that can affect your clients and your counseling. You can also join professional organizations that offer opportunities for growth. Time management and work organization: The productive use of time, coupled with good organizational skills, can help you conduct your daily work activities more professionally. Effective time management is a matter of making appropriate choices and using good judgment. Using time to its best advantage is very satisfying, because you feel you are accomplishing what you need to do. On the other hand, poor use of time leads to continual frustration, periods of frantic or useless activity, and procrastination. In addition to planning how to best use your time, you will need to make decisions about organizing your work flow. There is no right or wrong way to do things. Your plan must allow you to get the job done with the best use of your time. Organization is not an end in itself; it is a method of helping you prepare for functioning effectively day in and day out. One of the highest priorities in time management should be to meet your clients' needs.



APPENDIX

Community Resources, Agencies, and Organizations for Referring Clients

Children and Youth Alanon and Alateen Big Brothers and Sisters Boys Clubs Child welfare services Childrens' homes Community centers Day care centers Service clubs Family Service Agency Girl Scouts, Boy Scouts Head Start Public school social workers United Way YWCA, YMCA Clothing American Red Cross Clothing certificates (local stores) Community centers Discount stores Garage sales Goodwill Industries Local churches Salvation Army Thrift clothes shops and used clothes stores Consumer Problems and Complaints Better Business Bureaus Chamber of Commerce Consumer Service Division (state or local government) Federal Trade Commission Legal Aid Service Newspapers Small claims courts State attorney general's office Trade associations



Personal Counseling Services Advocates for the poor Churches Crisis centers Family Service Agency Marriage and family therapy centers Mental health associations Mental health centers Public school counseling University guidance clinics University marriage and family departments University psychological services Adult education programs (public school systems) Career Development (Manpower) Centers for retarded citizens Consumer Information Center, Pueblo, CO 81009 Continuing education (university) County and State Cooperative Extension Service Financial aid (university) IRS office Social Security Administrative office Tuition assistance (industries, businesses, private foundations, U.S. military services) Vocational or technical colleges Vocational rehabilitation Energy and Utilities Area Council on Aging Fuel assistance programs Energy assistance programs Local "weatherization" program Employment Church and community job counseling centers Employee assistance programs (offered by employer) Employment services or agencies State/Local Employment Offices State Employment Security Division Vocational Rehabilitation Financial Assistance American Legion Auxiliary City Housing Authority City Neighborhood Housing City Urban Ministry Community Development Department Community Foundation (of local city/region)



County Council on Aging County Department of Public Welfare Easter Seal Society Employee assistance program (offered by employer) Family Services Agencies Financial aid departments of higher education institutions Lions Club Loan companies Local churches, emergency funds Project Self-Sufficiency Salvation Army Social Security Administration Supplemental Security Income Township Trustees Unemployment compensation offices Human Services Departments Women-Infants-Children Programs (WIC) Food American Legion American Red Cross Community and Family Resource Center County Department of Public Welfare County Extension Office nutrition education Food Bank or Food Finders Food pantries Food stamp program Head Start Local churches Meals-on-Wheels Salvation Army Special Supplemental Program Township trustees Women-Infants-Children (WIC) Housing American Red Cross Board of Health City Housing Authority Community Outreach Farmers Home Administration Group homes Habitat for Humanity HUD housing counseling centers Local Human Service Departments Salvation Army



Section 8 of the federal government housing program Senior Citizen Centers Utility companies Veterans Administration Legal Area Councils or Agencies on Aging Bar Association (local) Board of Health Civil Liberties Union Court of Reconciliation Divorce mediation center Human Relations Council (discrimination complaints -state) Legal Aid Corporation or Legal Aid Society Legal Services Organization Minority organizations Medical American Cancer Society American Diabetes Associations Blind Assistance (sight impairments) Boys Clubs Community centers Comprehensive Health Services County or city health department Department of Public Welfare Fraternal orders Health referral services Homemaker-Home health services Hospital social services departments Lifeline services and Life Care Services Lions Club (glasses) Medicaid (medical care and drugs for totally and permanently disabled) Medicare (65 yrs. or disabled) Planned Parenthood (STDs, pelvic exam, and birth control) University dental schools (low cost dentures and dental work) University hearing clinics Veterans Administration Visiting nurses Mental Health Alcoholics Anonymous, Alanon, Alateen and similar programs Gamblers Anonymous Halfway houses Hospital social services department Mental health centers



Taxes Certified public accountants Internal Revenue Service (Federal or state) Volunteer and professional tax consultants Transportation Advocates for the Poor Ambulance service (local or hospital) American Red Cross Salvation Army Township trustees (may need an advocate) Volunteers-in-transportation



NFCC Member Code of Ethics These principles of organizational professional conduct were established to guide members of the National Foundation for Credit Counseling™ in their relationships with customers, clients, creditors and community.

Our members reflect these values and qualities in their internal operations including the treatment of those who work with and for them.

Members carry out their responsibilities as professionals, exercise sensitive professional and

moral judgments in all their activities, and avoid any actions that put personal interests ahead of public benefit.

Members serve the public interest, honor the public trust, and demonstrate commitment to

professionalism.

Members accept the obligation to know and obey the laws that govern tax-exempt status as a public benefit organization. They accept that as tax-exempt organizations, they exemplify openness, diversity, tolerance, fairness, and honesty.

Members perform all professional responsibilities with the highest sense of integrity to

maintain and broaden public confidence. Members maintain objectivity and are free of conflicts of interest in discharging professional responsibilities.

Members observe the profession’s technical and ethical standards and strive continually to

improve competence and the quality of services.



NFCC Member Quality Standards

Member Quality Standard # 01.00

Accreditation Member agencies shall obtain and maintain NFCC-approved accreditation. OFFICIAL COMMENT: Membership in the NFCC is predicated upon total quality service. Accreditation standards for Financial Management and Debt Counseling Service encompass the values and best practices of the NFCC. Currently, the NFCC recognizes the Council on Accreditation for Children and Family Services, Inc. (COA) as its accrediting body. Potential members must have submitted the applicable application fee to COA before they can be approved for membership in the NFCC. New member agencies must submit their COA self-study within nine months of their membership approval date and be fully accredited within 18 months of their approval date. Such agencies shall thereafter be reaccredited within the time frame established by the accrediting body.




Access and Availability Member agencies shall provide services within a reasonable amount of time and at times convenient to the public. Member agencies will not discriminate in providing service for any of the following reasons: age, race, color, creed, national origin or ancestry, physical or mental disability, medical condition, gender, sexual orientation, religion, employment, marital status, financial status or any other consideration made unlawful by federal, state or local law. OFFICIAL COMMENT: NFCC member agencies will not discourage counseling for any reason. Pre-screening for Debt Management Plans (DMP)* is expressly prohibited. Member agencies should refrain from waiting to schedule a counseling session until the potential client completes and returns a written application or questionnaire; such action will be considered a form of pre-screening. Member agencies must have operating procedures in place to assure timely service, recognizing that various times of the year create increased consumer demands.

* A Debt Management Plan is defined as an agreement between the client and a member agency to assist the client in repaying all unsecured outstanding debt. DMP agreement forms must include the client’s expectations and responsibilities, an enumeration of the debts, a proposed payment for each creditor, the total debt owed, and a statement of the client’s right to cancel the agreement.




Mlitcr OF Meded Pucoed Gr

NF

Group Financial Literacy

ember agencies shall develop, foster, or provide consumer group financial eracy programs on money management, budgeting and the responsible use of edit.

FICIAL COMMENT:

embership in the NFCC requires adherence to the mission of the NFCC. We are an ucational organization providing high caliber, professional, confidential counseling and ucation services.

blic relations and marketing activities do not qualify as education events. One-on-one unseling sessions provide valuable education, but do not qualify in this standard as a group ucational event.

oup financial literacy programs are designed to comply with 501 (c)(3) service requirements.

CC Counselor Certification 2005V1 58



Counseling Sessions Member agencies must provide comprehensive, one-on-one money management counseling and provide a written assessment and action plan to the client as applicable to the service provided, or as required by law. OFFICIAL COMMENT: Comprehensive money management counseling is defined as an interview or series of interviews which includes but is not limited to, discussion of financial goals, sources of income, expenses, consumer debt (secured and unsecured), housing costs, utilities, garnishments, tax debt, credit reports, referrals to other sources, settlements of debts, etc. when it is applicable to reach goals. Quality counseling is based on thoroughness. Our goal is to educate and give guidance to those who seek our help. A thorough review of the client's financial situation must be an integral part of the service regardless of whether a debt management plan is feasible or necessary. A written assessment and action plan is defined as a document outlining the client’s individual situation and offering appropriate solutions. It will include: • a complete budget assessment with a review of income, expenses, debt, housing issues, etc.; • identification of problems and need for appropriate referral or services; • an assessment of the client's and family’s strengths and resources for addressing their

problems and reaching their goals; and • options and action steps for the individual or family. Clients shall be provided with adequate information through the written assessment and action plan to assist them after they leave the counseling session. This is our opportunity to assist in their personal financial plan with educational handouts, referrals and prioritized action steps. Clients under stress cannot be expected to remember the counselor's advice in all cases. Both counselor and client can refer back to the written assessment.




Counselors Individuals providing counseling must be certified by an NFCC-approved certification program or have their work reviewed and approved by a certified consumer credit counselor. Member agencies are prohibited from paying financial incentives to counselors based on the number of DMPs established or assessing financial penalties to counselors if their client leaves a DMP program. OFFICIAL COMMENT: Member agencies shall employ qualified individuals who must obtain certification within one-year from the date of their employment as a counselor and maintain NFCC certification as outlined in the counselor certification process. Member agencies must conduct a state or county criminal background check on all counselors prior to their start of duties. Member agencies must establish additional training and development programs for counselors to improve knowledge of agency policy and procedures, interpersonal skills, and abilities that enhance counselor sensitivity to the needs and preferences of clients. Member agencies must register, with the approved certifying entity, all new counselors within 120 days of date of employment or promotion.




Debt Management Plans Member agencies shall establish debt management plans only when appropriate and predicated upon client needs and preferences to assist in achieving their financial goals and objectives. OFFICIAL COMMENT: NFCC membership is an assurance of quality to both client and creditor. Member agencies shall ensure:

• that the amount available for the repayment of the client’s indebtedness represents the client’s best effort after a thorough evaluation of income, expenses, assets and debts;

• that proposed debt management plans will reflect that the consumer’s indebtedness can

be repaid in 60 months or less, including interest. A plan may be established for longer than 60 months, with documented extenuating circumstances. Debts with contractual repayment periods of over 60 months, such as automobiles, mortgages, and other secured debt, may be included in the plan, but can be excluded from the monthly payout calculation;

• that in any proposed plan, negative amortization shall be avoided and that all known

debts are accounted for in the written action plan;

• that neither the agency nor the client exclude selected creditors from the program unless the counselor and client determine that inclusion of the creditor on the plan will be detrimental to the client, for example the creditor automatically increases the interest rate to the maximum allowed by law. All creditor exclusions must be approved by member agency management;

• that a method of prorating accounts shall be employed that treats like creditors alike,

assuring that no creditor receives preferential treatment in return for financial support;

• that the disposition of credit cards is recorded;

• that the DMP reflects that the client will close all lines of credit and refrain from obtaining future credit without the member agency’s approval;

• that client confidentiality and the creditor’s rights to information are recognized. All

counseling provided by member agencies is strictly confidential. Client confidentiality as it relates to debt management plans refers to family, friends, employers, etc. A creditor participating in a debt management plan has the right to pertinent information (full



disclosure) such as: addresses, phone numbers (unless the phone number is unlisted), assets, income, expenses, other creditors involved in plan, balances owed, reason for plan, etc. Non–participating creditor should not be given any information without the client’s approval. When a client’s debt management plan has been closed, information may also be verified and/or released to only those original creditors listed on the original plan. Any creditor found to be using the information provided to harass an existing depositing client should be reported to the agency’s management/creditor relations division and may be denied information in the future. The NFCC’s Monitoring and Compliance Committee should be notified of any such actions taken with creditors;

• that the agency provides, at a minimum, a quarterly status report to active DMP clients

that fully discloses their deposit and disbursement history and approximate balances;

• that the agency establishes and adheres to a process of reviewing existing debt management plans annually, preferably including the client; and

• that the agency does not create any plans for the benefit of an individual client which

jeopardizes the plans of existing or future clients. Member agencies will avoid conflicts of interest by not paying agents, counselors, or employees commissions or referral fees for DMP accounts. Member agencies will avoid conflicts of interest by not paying creditors for client referrals or agreeing to receive reduced fair share to receive referrals.




Model Member Agency Funding Disclosure Member agencies must provide in writing to all clients counseled the following disclosure and explanation:

“Most of our funding comes from voluntary contribution from creditors who participate in Debt Management Plans (“DMP”). Since creditors have a financial interest in getting paid, most are willing to make a contribution to help fund our agency. These contributions are usually calculated as a percentage of payments you make through your DMP— up to fifteen percent (15%) of each payment received. However, your accounts with your creditors will always be credited with one hundred percent (100%) of the amount you pay through us and we will work with all of your creditors regardless of whether they contribute to our agency.”

OFFICIAL COMMENT: If an NFCC member agency does not request a full fifteen percent (15%) fair share contribution from any creditor, then that agency may replace the fifteen percent (15%) in the above disclosure with the highest percentage that it does request from any creditor. In addition, if an agency does not receive a majority of its funding from DMP contributions, the lead in phrase “most of” can be replaced by “some of”, as long as this statement is accurate and not misleading to prospective clients. In those cases where an agency uses the phrase “some of”, the agency must submit to NFCC an authorized certification of its Board that the disclosure used is accurate and correct. The above model member agency funding disclosure must be included in all promotional materials involving DMPs that an NFCC member provides to consumers, including any agreements for service that are filled out and/or signed by consumers. This phrase should also be used in response to inquiries about how NFCC’s members are funded. Agencies must submit their disclosure form to the NFCC annually or when the disclosure form is changed.




Model Member Agency Dual Role Disclosure

Member agencies must disclose the dual role that DMPs serve. Any materials that discuss DMPs must include the following:

“Our DMPs are voluntary programs that serve the dual role of helping you repay your debts and helping creditors to receive the money owed them.”

OFFICIAL COMMENT: Optional language is underlined above. Agencies must submit their dual role disclosure form to the NFCC annually or when the disclosure form is changed.




Model Member Agency DMP Duration Disclosure Member agencies must provide to each client enrolling in a Debt Management Plan (“DMP”) a reliable estimate of the length of time it will take to complete the DMP. This estimate must be provided in writing and identify all the client’s debts that are included in the plan; the total debt owed to each creditor; the proposed payment to each creditor; and the anticipated number of months to liquidate the debt. This estimate must be provided within 30 days of the date that the client submits their complete request for a DMP. OFFICIAL COMMENT:




Fiscal Integrity Member agencies must have sufficient internal controls to protect the assets of the organization from acts of fraud, misrepresentation, or misallocation. OFFICIAL COMMENT: NFCC member agencies are expected to handle all financial activities in a professional manner. Member agencies shall secure insurance in an amount appropriate to cover potential losses and meet all applicable state bonding requirements. Member agencies must reconcile operating accounts on a monthly basis. Member agencies must immediately report to the NFCC all known or suspected acts of fraud, misrepresentation, or misallocation of funds. Member agencies must notify the NFCC if their reserves fall below three months of operating expenses.




Client Trust Accounts Member agencies must have sufficient internal controls to protect client funds from acts of fraud, misrepresentation, or misallocation. Transfer or use of client funds for any purpose other than repayment of client debt is strictly prohibited. OFFICIAL COMMENT: Member agencies must exercise diligence in their fiduciary capacity as custodians of client funds entrusted to them. Client funds will be kept separated and segregated from operating account funds. Client funds must be deposited in a separate client deposit account in a federally insured financial institution. Member agencies shall secure insurance in an amount appropriate to cover potential losses and further meet all applicable state bonding and insurance requirements. Member agencies will reconcile client deposit accounts on a monthly basis. Member agencies must immediately report to the NFCC all known or suspected acts of fraud, misrepresentation, or misallocation of funds. Member agencies must also report unexplained variances in the trust account in excess of 1% of the trust account value.




Annual Financial Audit Member agencies shall have all financial books and records audited on an annual basis. Member agencies shall provide the NFCC with an entire copy of the completed audit report within 180 days of the close of each fiscal year. The audit report should include a note referencing the fact that a separate client trust account is maintained and that the account was reviewed by the auditor as part of standard audit procedures. Member agencies may submit a separate letter from their auditors noting the client trust account was reviewed if the trust account does not appear as part of the financial statements. OFFICIAL COMMENT: Member agencies must have an audit conducted not less than annually by an independent Certified Public Accountant. The audit must be conducted in accordance with Generally Accepted Auditing Practices (GAAP) as defined by the American Institute of Certified Public Accountants. Tests of compliance and evaluation of controls associated with this GAAP audit are to be applied to client deposit accounts and activity as well as the operating accounts and statements of the members, and shall be so noted by the auditor. The governing board must appoint a board member(s) to meet with the independent auditor to review the auditor’s findings. The board member(s) must make a report to the full governing body at the next officially scheduled board meeting.




IRS Forms 990 and 990-T Member agencies must file accurate and timely 990 and 990-T (if applicable) forms to the Internal Revenue Service. Member agencies must provide a full copy of both forms (if applicable) to NFCC within thirty days of filing. OFFICIAL COMMENT: If member agencies submit an extension request, it must be filed within 5 months from the end of the agency’s fiscal year to be in compliance. Member agencies must submit copy of extension to NFCC within 30 days of filing. Member agencies under NFCC’s tax umbrella are prohibited from engaging in activities that would endanger the non-profit status of the umbrella. Member agencies under NFCC’s tax umbrella must submit changes to tax exempt purpose in writing to NFCC 90 days prior to implementing program. NFCC has the right to deny activity if activity is deemed to jeopardize tax exempt umbrella.




Governance / Board of Trustees

To ensure broad-based, non-discriminatory community representation, NFCC member agencies shall have a diverse, voluntary governing board comprised of at least 10 members. No more than 10% of the voting members of the governing board may be persons directly or indirectly compensated by the NFCC member agency. No family members of the personnel of the NFCC member agency may serve on the governing board. The governing board shall be comprised of persons who do not have, or give the appearance of, a conflict of interest with the NFCC member agency. Governing board members and related parties are prohibited from using their relationship with the NFCC member agency for personal gain. This prohibition, however, does not apply to the compensation received by paid personnel of a NFCC member agency who serve as a governing board member. Member agencies shall establish and enforce a conflict of interest policy for employees and governing board members that includes the principles and prohibitions embodied in this standard. OFFICIAL COMMENT: Governing board members must disclose any business relationship with or financial interest in a corporation, partnership or entity with whom the NFCC member agency transacts business and must not participate in any NFCC member agency governing board discussion or vote concerning such corporation, partnership or entity. No governing board member or related parties can serve as an officer, director, employee, partner, proprietor, or own or control 10% or more of any for-profit corporation, partnership or entity with whom the NFCC member agency transacts business. Nothing in this standard or official comment prohibits governing board members from providing free or discounted products or services to an NFCC member agency. The provision by a governing board member of discounted products or services, however, must be supported by documentation showing the fair market value of such products or services. The documentation must demonstrate that the products or services were provided to the NFCC member agency at a discount.



Nothing in this standard or official comment prohibits a person who serves as an officer, director, employee, partner, proprietor, or owns or controls 10% or more of a credit granting organization from serving as a governing board member of a NFCC member agency, provided, however, that no more than 40% of an NFCC member agency governing board may be comprised of such persons. Related parties include family members and businesses in which a person owns or controls 10% or more of the entity. Family members include, but are not limited to, parents, spouses, siblings, children, stepchildren and relatives-in-law.




D&O, E&O and Fidelity Insurance Member agencies must carry adequate insurance and/or bonding on all employees with any access to agency and/or client funds. Member agencies must name the NFCC on their certificate of insurance and/or bonding policies for the sole purpose of receiving notice from the insuring company of any potential lapse in coverage. OFFICIAL COMMENT Member agencies must carry appropriate Directors & Officers (D&O), Errors & Omissions (E&O), and Fidelity (employee dishonesty) coverage with limits deemed appropriate by its local board of trustees and/or state/local requirements.




Fair Fees Guideline Member agencies should keep fees charged to customers or clients as low as possible. Member agencies may not refuse to provide counseling due to a client’s inability to pay. OFFICIAL COMMENT: As a non-profit human service agency that serves individuals and families in financial distress, member agencies should strive to make their services available to as broad a population as possible and not limit access to services due to an inability to pay.

Member agencies may not receive fees in advance of service.

Member agencies must disclose within the DMP an estimate of the total fees to be paid to the organization by the client and/or the creditor over the term of the agreement.




Ethical Practices and Conduct Member agencies will follow the highest ethical standards in governing their organizations and conducting all activities to avoid harming, misleading, confusing, or undermining consumers, clients, volunteers, employees, media, other NFCC members, and the NFCC. OFFICIAL COMMENT Member agencies are prohibited from providing false or misleading information about an organization or individual to the public; this prohibition precludes using NFCC’s communication tools and systems to provide information to NFCC members that cannot be substantiated. Member agencies must maintain the confidentiality of information entrusted to them or known to them as a result of their professional activities. Member agencies must manage all financial activities honestly following policies and procedures established to ensure financial honesty and prevent individual gain at the expense of a member organization or the NFCC. Member agencies must assume responsibility for remediating errors caused by any of their employees.




Advertising Member agencies shall not engage in deceptive, misleading or false advertising, and shall adhere to the highest standards of honesty and fairness. Member agencies must have the ability to prove any stated claim made within an advertisement. OFFICIAL COMMENT: Member agencies must accurately describe advertised services. Member agencies must list their name, corporate address, phone number and if appropriate, branch location on their website homepage and other nationally publicly distributed or available materials. On locally distributed or available printed materials and printed advertisements, Member agencies must list their corporate name, corporate address, and corporate phone number or the appropriate local branch name(s), local address(es), and local phone number(s). Member agencies are prohibited from referring to themselves as “Local” in any communication in a community if they do not have a brick and mortar office in the community in question.

Member agencies are prohibited from publishing a phone number with an area code and local exchange in any geographic area where they do not have a brick and mortar office.




Compliance with Federal, State, and Local Laws Member agencies are responsible for understanding and complying with all federal, state, and local laws. Member agencies must be appropriately licensed and/or registered as required by law. OFFICIAL COMMENT: Member agencies must notify the NFCC of any notice of investigation or actual investigation by

a federal or state regulatory entity within five business days of receipt.




Grievances Member agencies must establish written procedures to provide consumers and clients with a formal mechanism for expressing and resolving complaints and grievances. OFFICIAL COMMENT: Member agencies must provide consumers a grievance procedure at the time of initial application, and to clients upon request or at the initiation of a grievance. Member agencies must include an appeal process and ensure the timely resolution of issues. At the conclusion of the process, written documentation of final resolution must be included in client files. Member agencies must provide all clients access to their individual files as long as the client’s review is done on site and in the presence of agency personnel. Clients have the right to include statements in their files regarding the services they have or wish to receive. Member agencies must provide NFCC with their grievance policy and procedures if requested.




Private Inurnment and Private Benefit

Member agencies must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization.

OFFICIAL COMMENT: Member agencies are prohibited from transferring property to employees and/or their families and/or other closely related parties such as board members or vendors for less than market value. Member agencies are prohibited from signing above market value contracts with any individual or organization. Member agencies must be able to justify employee salaries within local, regional, or national employment markets as appropriate. Member agencies are prohibited from paying unreasonable compensation to employees. Member agencies must review salary structure with their Board at least bi-annually and such discussion should be noted in the minutes of said board meeting.




Reporting

When requested and approved by the Board, member agencies must submit accurate data to NFCC by stated deadline.

OFFICIAL COMMENT: NFCC will require specific data on a quarterly basis and may on an annual basis require additional information. Additional requests will state the need to comply with this standard when information is necessary. Member agencies needing clarification on requested information must send to NFCC a clarification request in writing at least seven days prior to submission deadline.




Nepotism Member agencies shall maintain policies and procedures that prohibit nepotism and specify:

a. conditions for employing and retaining relatives of governing body or advisory board members;

b. conditions for employing and retaining relatives of employees; and c. protection against favoritism in supervision and employment decisions.

OFFICIAL COMMENT: NFCC defines “nepotism” as favoritism based on a personal relationship. Member agencies must report annually all situations of direct and indirect family member supervision that exist at the “Officer” or “Key Individual” level as defined by the Internal Revenue Service for Form 990 purposes. Such member agencies must annually submit all policies related to the direct or indirect supervision of individuals. Member agencies must have nepotism policies and procedures in place that:

• allow non-family and family members to file grievances to an independent individual; • require independent review, verification, and justification of salary increases or bonuses.




Technology Requirements for Delivering Quality Programs Member agencies must have the technical systems and capability to assure the timely, accurate and effective delivery of quality programs. OFFICIAL COMMENT: Member agencies shall possess an adequate technical infrastructure to address all communications with clients; specifically, they must have sufficient phone lines and Internet capabilities if they provide services by phone or Internet. Member agencies must have unique email addresses for senior staff. Member agencies must take precautions to protect electronic systems and communications. Member agencies must have a web site that identifies the products and services that they deliver to the public. Member agencies must disburse client payments at least once a week. Member agencies must have the ability to have ready access to credit reports. Member agencies must have the ability to electronically transmit non-client-specific data in a prescribed format as set by the NFCC Board of Trustees.


basic counseling principles.pdf

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