Cancelling debt management company

iVillage Member
Registered: 08-12-2003
Cancelling debt management company
18
Mon, 08-09-2004 - 11:59pm
Hello to all of you. Wondering what happens when you cancel debt management company and start paying creditors on your own. Has anyone done this?

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iVillage Member
Registered: 05-06-2004
Tue, 08-10-2004 - 11:30am
A close friend did this after she had paid 6 of 10 c cards off. I think her finance charge went back up on a couple of cards, but otherwise everything was ok.
iVillage Member
Registered: 08-06-2003
Wed, 08-11-2004 - 9:49am
It depends on your creditors, your track record in the program, and other such factors; generally, it's *not* recommended, as your interest rates will go back up to the rate you were charged before the program started (the "default" rate, usually). In some cases, your creditors will go back and adjust the balance to add on interest that you *would* have been charged had they not dropped the rate for you - AMEX does this and warned me about it at the start of the program. They also can reinstate any late/overlimit fees that were dropped for you.

Most creditors will not let you attempt a CCCS/DMP more than once, either. If you drop out now, they won't approve putting you back in should you need it six months later.

Then again, depending on the creditors and your track record, it might work out totally different. Just make sure you read all your fine print.

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iVillage Member
Registered: 03-27-2003
Wed, 08-11-2004 - 9:14pm
Thought I'd post after seeing so many of these questions...

Yes they definetly affect your credit negatively! Applying for any home loan most creditors will consider it like a CH 13...I rarely post because I hate to be know as the mean one around the board, but I feel that most poster can pay their debts, but they must commit to a total life change...and that is hard...I know I've done it...You should handle your own finances, not turn it over to a "debt elimination" company to do it for you...It all comes down to being serious about ridding yourself of debt!

Jaime

Where's the TAX BOARD!?

iVillage Member
Registered: 08-06-2003
Thu, 08-12-2004 - 2:57pm


That is not exactly true. It all depends on who the creditor is and what program you're going through. CCCS is a genuine non-profit organization that helps you *manage* your debt, and it is absolutely NOT what most people consider a "debt-elimination" or "debt consolidation" company.

Most creditors nowadays understand that it is *not* anything like a chapter 13 bankruptcy, and it does not affect your credit for nearly as long or as badly. In many cases, once the program is completed, there is *NO* notation of any DMP on the credit report, whereas a BK notation stays on for 10 years. Most cards paid through a DMP will also be marked "Paid in Full, Closed by Client."

Many, many creditors are more than happy to extend reasonable credit to someone who has completed such a program, and there are several out there who will extend mortgages and car loans to people who are stil *in* the program. There have been posters here who work for such companies, as a matter of fact. They recognize that often, a DMP is the *smartest* way for a person to get out of debt, quickly, while still honoring their obligation to pay for everything they charged. It's certainly better than continuing to struggle for fifteen or twenty years, missing occasional payments, and falling farther and farther behind.

It *does* damage credit *if* the credit score is currently high; if someone is just struggling a *little* bit, then CCCS would likely cause more harm than good. However, if someone has missed payments, is going to miss more, and cannot hope to pay it off in a reasonable amount of time, CCCS is most definitely a better way to go than struggling through it; often, several months of on-time payments can *help* someone's credit score. You pay back 100% of the debt incurred (so it's not like they're *not* paying their debts - and that implication is rather insulting), but at a lower interest rate - which the CCCS has more power to negotiate. Rather than paying the 25.99% "default" rate that's applied after just one or two late payments, it is reduced to anywhere from 0% to 9.9%, depending on the company. CCCS does *not* reduce the amount owed.

In any case, The OP was asking about *cancelling* the DMP they're already involved in - not whether or not they should start one.

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Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Thu, 08-12-2004 - 5:24pm
Well, I can pay my debts and I intend to. Entering a DMP doesn't mean you ask creditors to write off your debts, it means committing to a plan to pay off everything in full on a timetable and not taking on more debt. I just want something approaching a reasonable interest rate, and my creditors won't negotiate with me on my own. In almost every case, they raised interest rates from, say, 3.9% to 24.98% *or higher* with one late payment. How am I supposed to pay anything off when my rates are 24.99 to 27.99%? I've been on a DMP for 2 months and have FINALLY seen my total debt come down for the first time in over 2 years because my money is finally going to paying off principal instead of interest rates that used to fall in the category of loan-sharking.

Please don't come on here and tell other people they can just do it because you did. You're not walking in their shoes. I have 3 young children and a husband to support, and we are hardly doing it in high style. And I AM managing my own finances.

Kelly

Avatar for lovemybigboys
iVillage Member
Registered: 04-02-2004
Thu, 08-12-2004 - 9:33pm
Kelly, I agree with you. My interest rate was raised on one high balance card because the day I went to pay online, the due date, THEIR website was down, hummmmm, so my payment was one day late, interest went from 7.9 to 24.9, I called and asked if there was anything I could do, they told me to contact a CCCS. Another one went from 12.9 to 24.9 by "default" they said they sent me a letter, well, I never got it. Anyway, they told me the same thing, as my payment doubled and I COULDN'T pay it, this was another HIGH interest card. I am doing it on my own but with the phenominal interest rates the balances NEVER went down so all I was doing was paying interest :-( Sure the interest rates are lower, not to where they were before they up'd 'em but at least more of MY money is going towards principal.

Sunshine
iVillage Member
Registered: 03-27-2003
Sun, 08-29-2004 - 2:42am
I knew some flames were gonna come my way....no biggie...

"CCCS is a genuine non-profit organization that helps you *manage* your debt"

CCCS is definetly the most legit of all these...Why are YOU not managing YOUR debt?...As for the non-profit part, it doesn't mean anything except that they don't pay taxes on the income that's put back into the company(and pay the execs,if it didn't pay good you would see so many of these agencies, would you?)...see the FTC lawsuit against Ameridebt...

http://www.ftc.gov/opa/2003/11/ameridebt.htm


"Many, many creditors are more than happy to extend reasonable credit to someone who has completed such a program, and there are several out there who will extend mortgages and car loans to people who are stil *in* the program."

I'm sorry, but I have to say that you have really taken what these agencies and creditors are spoonfeeding people...Of course creditors and will be happy to lend it to someone out of or in the programs because the are likely to charge you a higher interest rate than someone who isn't...yes they are taking the risk that that person will not be able to pay again, but the rewards are definetly higher...don't believe me? look at every dealership ad (newspaper, tv, radio, doesn't matter) and bankruptcy or bad credit is welcomed! Oh yea, they just want to help you build your credit...at a rate of 24.99% a year.

"several months of on-time payments can *help* someone's credit score."

So why have a 3rd party do it for you and not yourself? Oh right, they have more leverage!

"The OP was asking about *cancelling* the DMP they're already involved in - not whether or not they should start one"

The OP privately e-mail and agreed with my post and has decided to take the reins and handle her/his own finances(regardles if it was an elimination co or not)...Good for her! Made my day and I know she is on track to a better financial future!

Jaime

When's the tax board coming back?




iVillage Member
Registered: 01-28-2004
Mon, 08-30-2004 - 9:32am
The Taxes board will be back in January.

Corrine, Sr Community Moderator
money

iVillage

iVillage Member
Registered: 08-06-2003
Mon, 08-30-2004 - 10:10am


CCCS has absolutely nothing to do with Ameridebt - they are completely different organizations. Ameridebt is alleged to have actually been a front for for-profit organizations - a scam, in other words, that used television ads to lure in folks who didn't bother to do sufficient research beforehand.

As for choosing CCCS, it IS me managing my debt. They use their leverage to set a more reasonable agreement for me with the credit card companies, and they disburse my monthly payment electronically so I don't have to waste my time every week licking stamps and mailing envelopes. *I* am in charge of my budget, *I* manage my money. They do not automatically debit my account. They do not handle any of my other bills. Using CCCS is no different (management-wise) from using an automatic bill-pay service at the bank.



As far as CCCS goes, Non-profit means *exactly* that - they do not make a profit. In fact, our branch of CCCS relies on donations from our local United Way to stay in operation; monthly contributions (completely voluntary and less than $20 in most places) from clients are not enough to sustain basic operations. They *used* to be able to rely on a "kick-back" from the credit card companies as well, but most of them have stopped contributing, on the basis of "not having enough money" (while raising all of their rates and fees). In the off-chance that there *is* any surplus income, it is used to expand their services where necessary or to reduce the amount that the clients contribute monthly.

There are so many CCCS agencies, not because they *pay* well, but because they are a community service, a charity of sorts, and their services are in demand. If "good pay" was the reason for there being "so many of these agencies," then why do we have so many Humane Societies and Libraries? Profitability has very little to do with the size of a community service group.



Of course it's sometimes a highter interest rate - but it's often lower than it would be otherwise. With a little careful shopping, credit is available at rates much lower than those of a Chapter 13 BK, and often even at rates that are similar to someone who has not had any credit problems. Wish I could find the link here from someone who worked in the mortgage industy; she said she routinely made home loans to people fresh out of (and some *IN*) CCCS, with absolutely no penalties on the interest rates when compared to people with no past credit problems.

After having done CCCS for almost a year, DH and I have noticed that the credit card offers we (still) receive in the mail have changed. While in the midst of our money problems over a year ago, we began receiving only "secured" credit card offers, with limits $250 and under. But, for the past six months, we have consistently received nothing but unsecured offers, oftentimes with zero to 9.9% fixed interest rates, and limits starting at 5k. LOL. Of course, they *all* go straight in the garbage, but those offers are sent only to those who "pre-screen" at a certain level. While I understand that they are not guarantees of acceptance at those rates, I do feel they are a decent indicator that our credit status is recovering nicely.



Doesn't matter if you believe it or not - I've bdtd. Many people here have bdtd. CC companies will *not* negotiate most people down to a 9.9% rate after having jacked up the penalty rate to a 27.99%. CCCS was immediately able to get *each and every one* of my cards down to 9.9% or *less,* with three of them (Sears, AMEX, and MBNA) down to 0.0%. Through CCCS, I pay NO late fees, and NO overlimit fees. Good luck getting a CC company to agree to all of that on your own, without months and months and months of threats, calls, and harassments. Heck, even *with* months of threats, calls, and harassments, it is highly unlikely that they will agree to all of those things for a consumer. I'd recommend reading more of the posts here, especially unter the "Vents" section, for tales of just how willing the cc companies are to negotiate interest rates with their customers.



Good for her if it works, yes. But every payment that is late is another black mark on her credit report. Her CC companies will once again be able to raise the interest rate to whatever they want, *whenever* they want. If she *can't* make it work on her own, her CC's are not very likely to give her another chance on CCCS. We'll just have to keep our fingers crossed for her.

Point is - oftentimes, CCCS is preferable in every way over attempting to "manage" overwhelming debt on one's own. Choosing to work with CCCS is not skirting one's responsibility, and does not relieve the client of responsibility for paying back every penny they spent on the accounts. CCCS is not equivalent to a bankruptcy. CCCS *does* have more negotiating power with credit card companies than an individual consumer has.

No, CCCS is not the way for everyone, but it is unwise, unreasonable, and untrue to insist that every individual has the ability to so effectively negotiate with CC companies that they can achieve the same results. It is also untrue to assert that CCCS is universally as bad on a credit report as a bankruptcy.



No idea - probably when it gets closer to tax season again; very few of us start preparing our stuff this far in advance.

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iVillage Member
Registered: 09-01-2004
Wed, 09-01-2004 - 4:32pm
This is not a direct answer, but I wondered about the process you went through when you were WITH the debt management company. I'm thinking of calling one to help pay off my debts, and wonder how your experience went? Any advice, pointers, caution, words of wisdom, etc., would be most welcome!

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