Should we try Debt Management
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Should we try Debt Management
| Tue, 06-28-2005 - 9:15pm |
A few months ago I contacted Consumer Credit Counseling but was told by them that our income didn't meet the qualifications - my husband had been out of work for several weeks. Since things are so bad right now should we consider going through them --- of course I still think we owe way more than we make -- actually I know that we do-- it is like we have dug so deep we can't see the top - he is working again but I don't know how you ever catch up - each week we seem to fall further behind. I know that the debt managment goes on your credit record and can really hurt it --- but so can not making payments...my guess is that if we did qualify that the payment to them would be so high that we wouldn't be able to live through the month....what do ya'll think?

I can attest to that, since we've been with a DMP program for 3.5 years and my credit score hasn't budged. The thing is, you have to qualify, and have to be able to make the payment each month that they require. You may want to check back with them and discuss the situation.
CCCS doesn't hurt your credit, the existing problem accounts hurt your credit. CCCS freezes everything on your credit the way that it is when you beging the program. Obviously, once you start making payments, your creditors aren't going to report you 30 days late anymore, etc., because they'll be getting timely payments each month. And the other poster was right that your payment to the DMP will be less than what you're paying out now monthly.
Anyway, the problem accounts will slip off your credit over time. DH and I went through CCCS when we first got married in 1998 and finished the program in 2001. The things that were on our credit reports then are disappearing now (7 years later). It was worth it for us because we didn't want bankruptcy following us around; for us, personally, paying it off was doable and we felt more comfortable with that decision. I still don't regret it, although we did get some pretty crappy interest rates on vehicles years ago which we couldn't really dispute because they were an absolute necessity to have.
You get through it though. Good luck to you in your decision!!
When we went to a CCCS many years ago, the agent actually told us that he didn't recommend the service for us because it *would* hurt our credit. He said if you already have accounts in collections and past due and are having a hard time meeting your responsibilities, then it can be a really good thing. But for people with reasonably clean credit (as we had then) and a good income (as we had then lol), it didn't make sense.
The way he explained it was that while the CCCS agency would not report our participation to the credit bureaus, the credit card companies would, and that it would look to potential creditors like we weren't able to handle the debt load ourselves. He strongly recommended that we try to get the debt under control ourselves.
I will add, however, that this was about seven years ago and I don't know how things have changed since then.
Heather
Heather - 7 years ago it was true that it did hurt your credit score.
All my best,
Danni
This is great to know! I'm glad of it, because it always seemed such a bummer that people should be penalized for asking for help!
Thanks Danni,
Heather
>>Where it may be an issue is if an individual lender (say a bank that wants to determine whether or not to provide a mortgage), may hold certain prejudices against accounts that are in DMPs, and may make a determination not to lend funds because of the notations, not the credit score.<<
That's exactly what my loan officer told me when I asked him about it during our loan process last year.
Elizabeth - I'll agree that you're not going to get much from the program if you don't pay attention to what got you there in the first place. But I'll add that DMPs, like CCCS, usually offer classes to help clients learn how to budget. They also STRONGLY encourage you to not collect ANY NEW debt during the duration of your time in the DMP. Even when we bought a new car, we talked to CCCS first. Since you're usually in a DMP for x amount of years and not a short period of time, it is highly possible for you to learn to live without credit cards. We were told that aquiring new cc debt would jeopardize our agreements with our prior lenders, and whether it was true or not, we took it seriously.
I have nothing against bankruptcy; I know some folks who had to declare it because of life circumstances and really did shy away from applying for new credit for years (learning instead to live within their means). When they finally started rebuilding credit they were so smart about it. I also know more than one couple who declared bankruptcy and within a few short years they were back to where they began. I know another couple who keeps getting loans from family to pay off all their debt only to rack up the charges again and again. They'll probably never learn to live within their means ... but that's their private choice.
For us (husband had debts from a divorce and I came into the marriage with cc debts from college, and we couldn't afford to pay all of it on a military salary) CCCS made sense. We joined up with CCCS within a few months of getting married and it really helped us learn to live within our means. But this is such an individual decision each family should make. We've been able to handle our debts much better since getting out of CCCS and rebuild our credit. Now if we can just get past the fact that we're part of that struggling middle class facing more and more financial problems (higher costs of everything, for example, with wages that don't increase to match the costs) we'll be able to finally breathe!
Hi,
I'm new here, and my husband and I are just about to enter a CCCS program. We are current on our bills, but stretched really thin, feeling overobligated and frustated by our former lack of insight into what high interest rates really mean.
I was concerned though, (as bad as this sounds) that I would not be allowed to take out Parent Plus loans through Sallie Mae for our youngest just entering college in the fall. Some loans will be necessary, and I feel that student loans/parent plus loans are good debt.
I called Sallie Mae repeatedly to get an answer about how this would impact my credit eligibilty for borrowing for my youngest. (I currently am approved and have out loans for an older daughter who graduates this year) He spoke to his supervisor for a a few minutes and came back to the phone and said that being in a DMP would not impact my eligibility with them.
Hearing this was the decision maker for us.
Reading through this thread and seeing the new updated realities of how being in a DMP really doesn't impact with most lendors was helpful. Thanks! I'm glad to have found this group.