CredAbility, an Atlanta-based nonprofit that counsels people in financial distress, laid off 70 workers Thursday, blaming the loss of a $3 million federal grant, plus a decline in demand for its services.
Tightening consumer credit made it harder for borrowers to get in trouble, CredAbility spokesman John McCosh said.
Suzanne Boas, the retiring president of CredAbility, said people are learning to live within their recession budgets.
"There is significant improvement in the way people are managing household budgets given the economy," she said.
Credit reporting agency Equifax reported bad debt write-offs for consumer credit dropped from $68.1 billion in the first quarter of 2009 to $41.6 billion during the first quarter of this year. More metro Atlanta borrowers were on time in their payments on their mortgage, auto loans and credit cards in the past month vs. May a year ago, Equifax said.
Wells Fargo reported to The Atlanta Journal-Constitution last week that there has been an uptick in people paying mortgages on time from 90 percent to 93 percent.
All the news is not good for consumers. CredAbility surveys consumers to check on their financial health quarterly.
"We just put one out in May that shows there is still a lot of financial distress out there," McCosh said.
Business foreclosures are up, said Steve Palm of SmartNumbers, a real estate analysis firm. There were $22 billion in foreclosures in metro Atlanta in 2008.
"And it's not going to go away," he said.
Credit counseling agencies nationwide are experiencing budget crunches. The reason is cuts in grants from the Department of Housing and Urban Development and fewer consumers nationally reaching out for credit assistance, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.
About 3.9 million debtors sought assistance nationally in 2009, a figure that dropped to 3.2 million in 2010.
“Here we are in 2011 it is still trending down,” she said.
CredAbility grew with the economic collapse. In 2007, it had 270 workers and expanded to 530 as the economy shrank and people found themselves with no jobs or underemployed and in over their heads.
McCosh said the slowdown in demand was apparent. For instance, demand for foreclosure counseling dropped nearly 9 percent comparing the first quarters of 2010 and 2011.
The laid-off CredAbility workers will have a minimum of two weeks' severance pay, plus a week for every year of service after that. They also will receive counseling in dealing with the layoff and finding work, he said.
The nonprofit credit counseling agency's annual operating income (revenue minus expenses) declined 42 percent to $2.8 million in 2009, the last year the agency filed a Form 990 with the Internal Revenue Service.
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