It is my very distinct privilege to walk you across the broad landscape of the issues that will confront the credit counseling sector, creditors, the NFCC, consumers and policymakers over the next 12 months.

As I thought about what I wanted to say today, I began by looking back at what I said at last year's leadership conference in Albuquerque. Considering where we were then and where we are today, I can only say: "What a difference a year makes."

Last year at this time, we met amid the anxiety and uncertainty of the new bankruptcy law. While we had all worked hard to get ready, we could not say for certain how many new clients we would be asked to serve, whether we would have the capacity to do the job, or whether the funds pledged by creditors would be sufficient to pay for the new infrastructure and counselors to meet our new obligations.

Last year at this time, we were shadowed by a cloud of public doubt because of a small, but aggressive and increasingly visible group of organizations that seemed more interested in profit than service. Flying under the false flag of "nonprofit credit counseling agencies," these organizations' activities threatened the reputation of NFCC members and other service-oriented counselors who were truly dedicated to helping consumers take control of their personal finances.

Today, I am happy to report that we have more than met those challenges.

Over the last 12 months, we have stepped up to the demands of the new bankruptcy process and made sure that every consumer who came to an NFCC agency for bankruptcy counseling was received with open arms and enrolled in the required sessions. Before the new law took effect on October 17, 2005 the NFCC expected that with the addition of bankruptcy counseling and education services, our client volumes would double, and between October 17 and the end of August, NFCC member agencies provided an estimated 500,000 bankruptcy counseling sessions. We also continued to meet the needs of those who turned to us for non-bankruptcy services as well. All told, NFCC member agencies provided well over a million counseling sessions in the last 12 months, and those numbers for full year 2006 will be even greater still. To all of you in NFCC's 115 agencies in nearly 1,000 locations across the United States, my hat is off to you for a job well done.

During that same time, government agencies and the U.S. Congress supported our efforts to take back our sector from the debt mills that thought credit counseling was just another way to make a buck. Thanks to a vigorous review by the IRS and the enactment of the credit counseling provisions of the new Pension reform law or H.R. 4, it's going to be much tougher for any agency to push so-called 'solutions' that make profits for the agency at consumers' expense.

NFCC member agencies weren't just bystanders in this effort. When the initial proposals outlined in Congress threatened to disrupt legitimate fair share funding and unduly restrict Debt Management Plans even when they were the right solution for consumers, you stepped up and made your voices heard. From every state, you reached out to your Representatives and your Senators and you educated them about the right way and wrong way to respond to abuses. The result was a piece of legislation that embodies NFCC principles and standards and sets our sector securely on the right path.

Those are the headlines, but that's not all we accomplished. There's a lot of news below the fold, too. We have forged new relationships with creditors in search for better ways to work together in a changing economic and political environment. Together, we are seeking sustainable ways to keep funds flowing so that we can meet consumers' changing needs in a world where new types of credit spring up almost overnight.

We are working on a number of new partnerships to advance financial education and other NFCC initiatives. I don't want to jinx some good things with premature declarations, but I am optimistic that we have some exciting and innovative agreements to announce in the next couple of months. One recent example is our connection with Liz Pulliam Weston and MSN Money. As you know, tomorrow has been declared "Get out of Debt Day" by MSN in conjunction with the NFCC. Through an announcement in Liz's MSN Money and syndicated Money Talk columns, as well as great exposure through her message board and the MSN Money homepage, consumers will learn more about the NFCC and the services that our members provide to consumers everyday, with a call to action to contact an NFCC counselor for valuable advice. We are so grateful for this opportunity to work with Liz and MSN Money to personally assist consumers with their debt management challenges.

We are strengthening our long standing commitment to public service by expanding our services into a wide range of new areas including housing counseling. In addition to helping individuals who need assistance with high debt loads, the NFCC and a growing number of our member agencies are focusing on "debt-prevention counseling" such as pre-purchase housing counseling. The new offerings also include programs that are customized to meet the needs of senior citizens, especially those on fixed incomes.

With the help of our new NFCC communications team, we have raised public awareness of the NFCC with all stakeholders.

Thanks to the hard work of both our member agencies and the NFCC staff, more and more Americans are now keenly aware that there really is a difference and that NFCC agencies really do live by a higher standard. This is exemplified in the fine work by Margo Mitchell and the Counselor Certification Task Force where professional education requirements for agency counselors and staff have been even further strengthened.

We have pushed forward our aggressive brand enhancement campaign, re-energized our media outreach efforts, and beefed up internal communications with our E-Newsletter and more regular member conference calls.

We have expanded our Advisory Council, and under Cathy Allen's leadership have added new depth to the Council's activities. This year we have opened Council Working Groups to selected non-NFCC members who share our commitment to leading the counseling sector to a better future. Melyssa Barrett of VISA is chairing a group on privacy and data security and our own Dawn Lockhart of CCCS of Jacksonville is leading a work flow process group.

We have also made important strides in reaching outside of the immediate NFCC family to build national bridges to a wider circle of social service and community organizations, including Neighborworks, NCRC, and Fannie Mae.

Expanding our circle of partners in this fashion isn't just about feeling good. I am confident that this type of open arms policy will inject valuable new perspectives and enable us to do an even better job of serving consumers. No matter how dedicated we are or how hard we work, we don't have all the answers. New voices tend to mean new ideas and fresh thinking.

Further, as we work with others in our sector, and enable them to get to know us better, we can create a new corps of partners who will work side-by-side with us in raising standards for our sector.

Right now, individuals who walk through the doors of any NFCC agency seeking help know that they will receive high quality and ethical service in which the consumer's interest always comes first. Wouldn't it be tremendous if consumers could have the same level of confidence when working with any credit counseling agency? Wouldn't it make you proud if we can use our national platform to extend the NFCC ethic across the entire credit counseling sector?

So, "yes," we have had a tremendous 12 months that has taken us from the shadow of uncertainty to the sunshine of accomplishment. Looking ahead I see a clearly marked path.

But, if the path is well-marked, it also contains some challenging spots for us to negotiate. There is still much work to do.

While the passage of H.R. 4 was a great success, the work of protecting our sector has not ended. The debt mills may find it harder to masquerade as nonprofits or qualify for tax exemption, but they have not given up their quest for dollars. They are continuing to work hard to create safe havens through state laws that authorize "for-profit" credit counseling. But if they succeed, you can be sure they will not go out of their way to publicize their new "for-profit" label. Rather, I believe that these profit-driven organizations will continue to sow confusion among consumers about how they go about their business and how we go about ours. They will continue to pretend that they have the same public service goal as genuine nonprofits. We want to emphasize "the differences; they will continue to hide them. So, our sector must remain vigilant and local NFCC agencies must lead the fight to oppose "for-profit" legislation when it comes up in their states.

As you all know, funding also remains a challenge.

It is increasingly clear that the long-standing fair share model is no longer sufficient to meet our sector's needs, especially at a time when our responsibilities are expanding. Creditors' contribution rates have created a funding gap. But more fundamentally, the link between fair share and DMPs means that, whatever the contribution rate, the funding base is just too narrow. It covers too little of what we do. Moreover, as we saw in the evolution of H.R. 4, policymakers are increasingly dubious about a formula that seems to give agencies an incentive to push consumers into DMP plans. While I am confident that NFCC member agencies base their counsel on the consumers' interest, we know that others may not. Accordingly, H.R. 4 clearly demonstrates a desire to loosen linkage between DMPs and creditor funding.

Thanks to an education effort by both the NFCC staff and our member agencies, Congress backed away from excessive constraints that would have arbitrarily restricted the volume of DMPs and also damaged the financial stability of many agencies.

But it is clear that the current fair share model is not sustainable. We must work with the creditor community to redesign fair share and identify other sources of funds, including grant programs that will support our full range of services. I am convinced that a growing number of creditors recognize that they benefit when our counseling and financial education programs help consumers do a better job of managing their finances. Consumers and creditors alike are better off when credit is used wisely. Our work helps make that happen, but we have to have the funding to deliver services.

We also remain challenged by bankruptcy.

After one-year of experience, we now know how the new process works. We have developed effective counseling programs, created outstanding curriculum and materials, and successfully managed the case load. We can be proud that NFCC member agencies uniformly stepped up to the challenge and accounted for the lions' share of bankruptcy-related counseling and education, especially pre-filing counseling.

But we also know that the number of bankruptcy filings and, therefore, the demand for our services in this area was lower in the last 12 months than it is likely to ever be again. We know that the capacity-building funds we received from creditors last year fell short of longer-term needs. We know that those funds were not sufficient to build the capacity we will need if bankruptcies return to the 1.5 million annual levels that prevailed from 2002 to 2004. While we have been told that the creditors' door is open for additional funds, we also know that, right now, they haven't put any additional money in the account.

While we successfully provided bankruptcy counseling to all who asked, our membership surveys showed that the cost of providing bankruptcy services substantially exceeded the fees from these services. This funding gap threatens our long-term ability to provide the needed services, especially if bankruptcy levels rise again.

If this funding gap persists, counseling agencies will have to find ways to cut costs. One obvious option is to reduce in-person counseling - the most expensive mode of delivery. Indeed, that's happening already. According to our Spring survey, only about one of 10 pre-filing counseling sessions involved face-to-face meetings. High quality counseling can and does take place by phone and Internet, but I think we all know that for some consumers and in some circumstances, in-person counseling remains the preferred option. I strongly believe that consumers must retain the ability to choose the delivery mode that best suits their needs. Sometimes, that means sitting with a counselor face-to-face.

In short, we won the first round by taking the lead in implementing the credit counseling provisions of the new bankruptcy law, but we have more rounds to go before the judges turn in the final scorecard.

And, the next hard test on bankruptcy may well come sooner rather than later.

A return to more historic norms is likely to boost the number of bankruptcy filings in the next 12 months. It is quite easy to imagine bankruptcy filings approaching 1 million in the next year - still well below the rate that we had grown accustomed to before last October, but substantially more than the nearly 400,000 filed since then.

There also is a real possibility that economic factors will push bankruptcy filings higher still.

The U.S. economy runs on credit. Over the past 30 years or so, credit has become a mass market product as lenders have adopted sophisticated risk management tools and grown increasingly creative in developing products for every segment of Americans. This democratization of credit has enabled most Americans to satisfy a wide range of material wants - for fancier cars, bigger homes, costlier vacations, and the newest electronics. But I believe it also has created a culture of instant gratification that has caused many Americans to borrow beyond their means.

Almost every month, Americans establish new records for owing money. Credit card debt now exceeds $820 billion and total non-mortgage debt totals about $2.2 trillion. That's a lot of money any way you look at it.

For the most part, higher incomes have enabled most Americans to prosper despite the mountain of debt. But, at some point, every economic expansion cools off. Our current run of prosperity is showing signs of fatigue that could be ominous for those who have been too exuberant in using credit. For those consumers who live close to the financial edge, even a small wobble - a cut in pay or change in their recurring expenses - can endanger their economic stability.

Indeed, higher foreclosure rates in the past year suggest that a growing number of Americans are already facing serious problems because of higher monthly payments as adjustable rate mortgages - ARMs - are adjusted upward.

Don't misunderstand. ARMs and other innovative mortgages developed over the last 20 to 30 years have played a powerful role in fueling the U.S. economy and enabling a wider segment of Americans to own their own home. When used responsibly, these mortgage innovations - like other forms of credit - enable people to enjoy a better quality of life. But with so many different types of mortgages now available, it is clear that many consumers are signing up for mortgage loans that they simply do not understand. Almost every day, our agencies counsel consumers who complain that they just didn't know what they were getting into. And, every time I hear one of those heart-rending stories, I think to myself - we've just got to do a better job in educating American consumers.

I believe the phrase "financial education" should be the new American mantra for every American who cares about our national well-being. Financial instability, unmanageable debts and bankruptcy are huge sources of stress that can tear families apart, destroy peoples' emotional and physical well being, and deprive children of a sense of security and limit their opportunities. That is why I believe that innovative credit products and innovative credit education should go hand-in-hand.

We are not going to roll the clock back to a time when people bought only what they could pay for in cash - nor would we want to because it limited too many people to just the barest necessities. But we can teach people how to put together a budget so that their monthly expenses do not exceed their monthly income.

We are not going to return to a time when credit was only extended to the wealthy - nor would we want to because it often meant only the richest among us could fully enjoy the material fruits of their labor. But we can teach individuals to understand how credit works and how to manage their personal credit risk.

We are not going to return to a time when you needed 20 percent down to buy a house and the only kind of mortgage was a fixed rate over 30 years - nor would we want to because it would deprive too many Americans of the benefits and satisfaction of home ownership. But we can do our best to make sure that borrowers know both the plusses and minuses before they sign on the dotted line.

But, too often, our counselors don't get a chance to get in the game until consumers are already in serious financial difficulty. As I noted earlier, data on those who come to NFCC agencies for bankruptcy filing typically show monthly expenses that run well ahead of income and debts that they have no realistic chance of paying off. Typically, as one agency director wrote, these consumers "are too far gone to save them from bankruptcy."

I can't count the number of times I have heard a frustrated agency professional say "if only we could have talked to them sooner." And, it's true. Our counselors do phenomenal work. Every year, NFCC agencies alone provide assistance to about 2 million Americans. But for far too many of those consumers, the best we can do is help them put the pieces together after a financial catastrophe. But they would be far better off if they had received the proper financial training earlier and avoided the wreck in the first place.

So, I believe the road ahead for our sector involves putting on the preacher's hat. We need to deliver the gospel of financial education and recruit a new army of financial education advocates among consumers, creditors, educators, and policymakers. Let me be clear, we have to reach outward; we have to deliver this message beyond the NFCC family and the credit counseling community; we have to find a way to get the attention and commitment of those, like political leaders and creditors, for whom financial education today may not be a top priority.

So in terms of the state of the sector, and looking back to our 2005 Leaders Conference, there is much to be proud of:

• Over the past year, we have solidified our position of leadership in the credit counseling sector;



• We have successfully expanded capacity to provide the required bankruptcy counseling and education sessions during the first year of the new law;



• We have worked with policymakers and regulators to cleanse our sector of organizations that put their profit ahead of the needs of consumers;



• We have allied with consumer advocates to protect consumers against efforts to create safe havens for so-called "for-profit" counselors in some states;



• We have made giant strides in helping the public recognize the differences among credit counseling agencies; and



• We have become more inclusive and are working to improve service delivery in all of our sector.

And because of these successes the NFCC now has a truly historic opportunity to become the undisputed national voice for the sector. I have been told again and again by policymakers that the NFCC should take a tight hold of this national leadership role and forge ahead.

I believe we are already a national leader. Over the next 12 months, I believe we should build on our momentum - and help create a national culture of financial responsibility at the individual, family, community, institutional, and government levels.

In the next year:

• We must become the leading advocates for financial education so that it becomes part of American life, not just a niche service of credit counselors;



• We must expand our network of partnerships and work with creditors to establish a working relationship that goes beyond credit card debt to the broader issue of financial wellness;



• We must continue to expand our scope of services, building on our outstanding work in the housing sector and with seniors to help consumers address additional areas of financial challenges;



• We must continue to weed the bad apples out of our sector and lead the charge for ethical standards that always puts the consumer first;



• We must expand our capacity to handle a likely increase in bankruptcy counseling - and we must do so while preserving consumers' ability to choose the delivery method that will result in the best outcome;



• We must revisit the fair share model and create updated funding mechanisms to ensure stability for our sector; and



• We must seek new ways to engage in preventive care that keeps Americans out of financial trouble.

We have a great opportunity if we choose to embrace it. I hope that a year from now, we will look back and say that the NFCC and its member agencies did everything we could to make a difference.