LSS Financial Counseling: Driven by debt

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Lutheran Social Service must have had some good financial counseling.

At a time when other Minnesota businesses are putting off hiring and scrapping big projects, its unit that focuses on helping people get out of debt and stay that way is in growth mode.

In the past two years, LSS Financial Counseling has doubled the number of counselors it employs to 40, opened a counseling call center and is embarking on plans to extend its reach well beyond Minnesota.

The moves reflect just how hard families have been hit by the foreclosure crisis and a relentlessly difficult job market. Many more desperate Americans have turned to a legion of debt settlement assistance-related businesses — some legitimate, some not — that have cropped up in recent years. In 2007, before the stock market tumbled and the recession settled in, credit counseling agencies that are members of the National Foundation for Credit Counseling — LSS included — served 2.5 million Americans. In 2009, that number jumped to nearly 4 million.

The growing need was clear at LSS. With the recession in full swing, an average of 50 people were being turned away each day; some waited six weeks to be seen.

“We’re in the crisis counseling business,” Susan Aulie, senior director for LSS Financial Counseling, said. Potential clients “can’t or shouldn’t be waiting six weeks to find the answer.”

So LSS borrowed $2 million from the Thrivent Financial for Lutherans Foundation and $250,000 from the Lutheran Community Foundation to hire an additional 30 counselors over a two-year period.

It opened a call center in the fall in Duluth, reacting to an industry that is rapidly moving from in-person counseling sessions to ones over the phone and online. Already it is considering expanding hours to counsel those who can’t call before dinnertime.

The center added enough capacity to provide help by phone immediately and shave wait times for face-to-face appointments down to a day or two, improving the service it can provide to Minnesotans, Aulie said. And it still provides face-to-face counseling in nine locations throughout Minnesota, one in Wisconsin, and at two state colleges.

A mission to change lives

Financial counseling is just one piece of the broader LSS mission to help Minnesota’s most vulnerable citizens. Founded 145 years ago to care for four orphaned Swedish immigrants, LSS has expanded its scope to include helping people find jobs, homes, day care and food. Throughout the recession, the nonprofit, now with an annual budget of $94 million, has been expanding in other ways. In 2008, the Eastside Financial Center in St. Paul, a collaborative effort between LSS, the U.S. Federal Credit Union, and Thrivent Financial for Lutherans, opened to provide financial services to Hmong immigrants and others living on the East Side of St. Paul.

In November of that year it finished a new $27 million headquarters in south Minneapolis. The Center for Changing Lives, as it’s named, includes 48 units of affordable housing and houses everything from an after-school program for youth to employment assistance.

LSS got into the financial counseling business in 1987 and grew fairly steadily until 2005, when the bankruptcy reform act was passed. The reforms required counseling. In 2007, LSS Financial Counseling helped 10,776 people. Last year that number had swelled by 65 percent to 17,834 people. The group expects to break 18,000 this year.

Of those helped, nine in 10 clients were within state borders. But the agency hopes that will change. In addition to being licensed in Wisconsin, where it has had a presence for years, LSS is now able to do business in Michigan and California, and is navigating requirements for doing business in several other states, including Georgia and Pennsylvania.

Of course, LSS Financial Counseling is expanding into states that already have groups doing the same thing. Darryl Dahlheimer, program director for LSS Financial Counseling, doesn’t see other legitimate counselors as his competition. “Our competitors are the debt settlement industry. Or our competitors are the unneeded bankruptcies,” Dahlheimer said. “Do I want to take 10,000 clients from somewhere else that’s an NFCC member? I’m not interested in that at all. I’m not even sure we could make the definitive case that we’re that much different.”

LSS’ main competitors in Michigan and Georgia have already taken their brands national. The Consumer Credit Counseling Service of greater Atlanta, which recently changed its name to CredAbility, said it has plenty of capacity to help whoever needs it. Even so, “it’s not possible for us to counsel the world,” spokesman John McCosh said.

LSS’ $5 million budget is funded by a mix in client fees from debt management plans and other services, grant funding, and contributions from creditors, who benefit from the credit counseling group’s services when it succeeds in helping people to pay what they owe.

With the call center in place, LSS is working to ensure the counseling that staffers provide is equally effective, whether online, in person or on the phone.

It is also ramping up financial education efforts, presenting lessons on everything from credit to budgeting at church groups, colleges and workplaces.

“We would maybe love to put ourselves out of business,” Aulie said. “Having a financially savvy consumer is a very good thing, and we really want to support people being better at budgeting, better at managing their finances.”

Kara McGuire • 612-673-7293

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