Durant S. Abernethy understands debt and how it can affect people.

The newly appointed president and chief executive officer of the Washington-based National Foundation for Consumer Credit thus can sympathize with the people who come into his organization's credit counseling offices, often out of desperation.

"I grew up in the Deep South on a cotton farm that my dad inherited, and when I was about 9 he went bankrupt," said Mr. Abernethy, 49, previously senior vice president and general counsel of the Credit Union National Association in Madison, Wis.

|A Wagon Train of Poverty'

"We moved to Kansas City in what I would call a wagon train of poverty, with many of our workers following us." he recalled. His father "kind of scratched out an existence in the Army. I know personally the impact on self-esteem that bankruptcy can have on people."

Later in his life. but early in his career as a trial lawyer handling divorce and children in crisis, Mr. Abernethy became more professionally aware of the devastating impact that financial problems can have on families."

Mr. Abernethy, who goes by the nickname "Ab," said he intends to bring a humane, practical perspective to the fast-growing umbrella organization for credit counseling agencies that are supported financially by banks and other credit granters.

Familiar with Organization

With an emphasis on education, Mr. Abernethy hopes to continue improving on the foundation's processes and programs, which will help creditors recover an estimated $2 billion of delinquent debt this year.

Mr. Abnernethy has long been familiar with the consumer credit foundation. Four years ago, he former a joint task force on debt managment between his credit union trade group and the foundation.

After getting word last year of the opening to succeed foundation president Donald Badders, Mr. Abernethy threw his hat in the ring because he was "attracted to the feel-good, white-hat mission" of the consumer credit group.

"I've been involved in many political issues," he said. "I've been the chief staff liaison for the ... safety and soundness standards that have been adopted by our corporate central credit union network, and it's those standards that have resulted in Moody's and Standard & Poor's giving many of our corporates the highest debt rating available."

Good News, Bad News

During the seven-year tenure of Mr. Badders, the 42-year-old National Foundation for Consumer Credit thrived. Unfortunately, the cause was the widespread overextension and abuse of credit during the 1980s.

"More Americans are living closer to the edge than ever," Mr. Abernethy said.

The nonprofit group's local and regional members now operate more than 900 consumer credit counseling offices in the United States, Canada. and Puerto Rico. The goal is to have an office in every city and town with a population of at least 30,000.

Free or Low-Cost Advice

Because they are supported by banks, consumer finance companies, credit unions, merchants, labor, legal and social service organizations, and other community groups, the counseling offices provide free or lowcost advice. They advise consumers on money and credit management, how to deal with debts, and offer alternatives to filing bankruptcy.

Federal Bankruptcy Court statistics show nearly one million people filed for personal bankruptcy in 1992, more than three times the 1980 number.

"What we really believe that people should keep in mind is that bankruptcy is the last resort, and we try to help people avoid that," Mr. Abernethy said.

A Million Calls

The local offices expect to receive nearly a million calls from concerned consumers this year - almost five times the rate in 1990. About 40% of callers just have basic questions or problems, and don't require counseling. The other 600,000 would visit their local counseling branches, and 8% of those would go on to file bankruptcy, Mr. Abernethy said.

About a third of those who come to the offices are advised on budgeting practices and payment plans by counselors who go over all their bills and debts. Together they arrange a practical budget that can be followed without further supervision from the credit counselor.

"They're the people we catch in time," Mr. Abernethy said.

Another 200,000, usually those in a more grave personal or financial situation, are referred to other sources for legal, professional, or personal assistance.

The remaining 200,000 enter into the debt management programs that are the offices' principal product.

Much like the first group, these consumers work out practical plans with their counselors, intended to pay off their debts in an average of 42 months.

This group differs from the budget-planning consumers in that their debts are usually much greater and they are aided and supervised in their payments by the counseling office.

"Our counselors are very good at what they do, and that is trying to create a very realistic picture." Mr. Abernethy said.

"The next thing that distinguishes us from many other services or collection agencies is that we'll only put people in debt-management programs who need to be there."

The consumer credit counseling offices contact the creditors - the average program enrollee has about 10 creditors - and gain a commitment to aid in the consumer's repayment.

About 10% of the branch offices charge a nominal fee to the debtor - $10 to $25 for enrollment in a debt management program or for counseling.

According to 1992 figures. participants in the national foundation's debt management programs owed 31% of their debts on credit cards, up from only 20% in 1989. Retailers were due about 17%, banks 11%, finance companies 10%, and credit unions 3% of those debts.

|Win-Win Situation'

More than 10,000 local, regional, and national creditors support credit counseling centers' debt management plans by freezing the interest owed, ceasing collection efforts, and remitting a "fair share" portion of repayments - usually 12% to 15% - back to the counseling offices. That funds about 75% of the centers' costs.

"The creditors, in effect, are getting, for a 5% to 6% payment. $2 billion back this year. and it's just a win-win situation from an economic standpoint," Mr. Abernethy said.

Representatives from many creditors hold seats on both the National Foundation for Consumer Credit's board and the boards of the local consumer counseling offices.

Dealt with Credit Cards

Aside from his experience with the foundation, Mr. Abernethy has spent the last 15 years dealing with the credit card industry. Before being installed as the Credit Union National Association's general counsel, he served as an associate counsel - beginning in 1978, when he was hired to defend credit unions in litigation over their issuance of share drafts as a substitute for checks.

Earlier, Mr. Abernethy worked as a trial lawyer at two firms in Wisconsin, and then opened his own firm.

He served three years in the Army between his undergraduate education at Carroll College and Marquette University Law School. He has a "financially conservative" wife and two daughters.

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