The head of a regional credit counseling agency said he has begun recruiting members for a trade association he formed to compete with the National Foundation for Consumer Credit.

The alternative group has been incorporated in New Jersey as the National Foundation for Consumer Debt Counseling - a name reflecting its emphasis on solving debt problems of overextended consumers, according to organizer Alan Franklin.

Mr. Franklin, president of not-for-profit American Credit Alliance Inc. in Trenton, is one of a number of independent credit counselors who have been critical of the Silver Spring, Md.-based National Foundation.

Those criticisms escalated last year into a federal antitrust suit that several nonmember agencies filed against the foundation, which consists of local and regional counseling entities supported by banks and other consumer lenders.

Although Mr. Franklin said he preferred to be conciliatory and did not sign onto the suit, he said he agreed with many of the accusations about the national group's cartel-like behavior and emphasis on debt collection at the expense of counseling.

The lawsuit has been the subject of several court hearings but progress has been halted by arguments over what court will have jurisdiction.

Mr. Franklin said he decided to form a new association after having been repeatedly rejected for membership in the national foundation.

Unable to piggyback on the foundation's contractual relationships with banks and other major creditors, Mr. Franklin must negotiate his own deals to bargain on behalf of clients.

"We think we can be a force for our members in the creditor community," said Mr. Franklin. "We prefer to focus on debt consolidation for the consumer and a policy that also makes sense for creditors in a highly competitive world."

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