It's not unlikely in the current environment of rising mortgage interest rates, that you could find it difficult to make ends meet -- especially if you have an adjustable rate mortgage (ARM).

But if you think you are going to slip, before you actually do, get some debt management counseling.

The sooner, the better.

The latest, albeit tentative, study looking at financial management delivery techniques -- by telephone or in person -- found that when debt management counseling is offered as part of the service, those who participate lowered their risk of bankruptcy and improved their creditworthiness.

Co-sponsored by the Consumer Federation of America and American Express Company, "Evaluating the Effectiveness of Credit Counseling/Phase One: The Impact of Delivery Channels for Credit Counseling Services" is the research work of Georgetown University's Credit Research Center director Michael E. Staten and John M. Barron, an economics professor at Purdue University.

The two sifted through 59,972 clients' files (with the personal identifying information removed) from 10 credit counseling agencies who variously provided face-to-face, telephone counseling and a combination of both for the clients. The clients had their initial session during March-April, 2003 and three years of credit report data and credit scores from TransUnion were included in the data.

Telephone service was provided to 67.7 percent of the clients; in-person help went to 22.6 percent of them and 9.7 percent got help via the Internet.

The survey found:

• Consumers who were recommended for a DMP (debt management program) and agreed to its terms had a significantly lower incidence of bankruptcy over the two years following counseling, and they had higher bankruptcy and delinquency risk scores (which means they were at lower risk for missing payments).

• The opposite was true of those who were recommended for a DMP, but chose not to.

• Clients who were not recommended for a DMP but did so anyway, experienced improved delinquency risk scores two years later, relative to those who didn't use a DMP, but they revealed no change in bankruptcy risk scores.

The study said there was no significant difference in the changes based on how the service was rendered, in person or by telephone.

The researchers were quick to point out that the study is an initial one which focused on consumers who receive help from agencies that emphasize client education, rather than simply a debt management program.

"This represents the most thorough research on the topic, yet was limited by the characteristics of data collected by agencies in the past," said Staten.

"In phase two of the research, the agencies will be collecting data on an array of new, more specific variables related to program features and client characteristics," he added.

Published: July 3, 2006

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.