Interest raising while on DMP

iVillage Member
Registered: 09-24-2007
Interest raising while on DMP
7
Tue, 07-29-2008 - 9:03pm

I am researching my options with debt consolidation companies, debt settlement companies, negotiating on my own etc.; and I have heard a debt consolidation company can raise the original interest you negotiated as part of a DMP. For example, they negotiate you down to 14%, but over a couple of years can raise you back to 24%. Has anyone ever heard of this happening? Is it only if you miss payments?

I have looked into CCCS, and they receive the majority of their funds from the credit card companies (this is listed in their website as you get ready to do an application), so I am concerned this may be an issue. Has anyone used them for more than a couple of years?

Lisa

iVillage Member
Registered: 07-11-2008
Wed, 07-30-2008 - 11:43am

I have looked into CCCS, and they receive the majority of their funds from the credit card companies (this is listed in their website as you get ready to do an application)


Please paste a link onto the board so I can see where you found this info.

 

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Wed, 07-30-2008 - 1:13pm

I believe it has always been true that many banks provide funding to CCCS/MMI type organizations, and they never try to hide the relationship.

All my best,
Danni

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Wed, 07-30-2008 - 2:57pm

This was definitely not the case with my DMP. I used a CCCS group which was acquired by MMI, but the terms didn't change. The creditors couldn't raise my rates unless I was dropped by CCCS/MMI for failure to pay. As long as I made my payments to CCCS/MMI, they couldn't drop me.

I get paid on the last day of the month, so I set up the DMP with an automatic monthly withdrawal on the first day of the following month, so I never missed a DMP payment. I also changed the due dates for all my credit cards to the 15th of the month, so they were SURE to be paid on time by the DMP (if your DMP cycle is a little off from the creditors' billing cycle, you could end up with late payments, and then your creditors *can* raise your interest rates). My rates stayed at 7%-9.9% for the duration. The monthly fee for servicing debt of over $50,000 was $35/month. I paid the debt off 15 months early, and there was no penalty for that.

The agency I dealt with was professional, not in the least smarmy, and very easy to deal with any time I needed to. It was a great solution for me in my situation: I had the money to make the monthly payments, but I needed to get lower interest rates if I was ever going to wipe out my debt. Which I did.

Kelly

iVillage Member
Registered: 07-11-2008
Wed, 07-30-2008 - 3:53pm

Thanks for the info.

 

iVillage Member
Registered: 09-24-2007
Wed, 07-30-2008 - 9:04pm

When I went on the http://www.cccsatl.org/ and selected credit counseling and debt management, start now, then selected a counselor evaluation, said I was a first time customer, created my log on and password, you get an Authorization for Service agreement, this is one of the statements under that agreement:

* We receive funding from entities that support financial counseling such as the United Way, private and corporate
foundations, state and federal governmental units, and creditors. A significant portion of our funding comes from
voluntary contributions from creditors who participate in the Debt Management Plans we administer for our clients.
Since creditors have a financial interest in having debts repaid, most are willing to make a contribution to help
fund the overall services of this agency. These contributions are usually calculated as a percentage of payments
that are made through a DMP. Additional information on how a DMP works is provided below.

Then, there is this information below the DMP information:

* Understand that in certain circumstances, a DMP may have a negative effect on your credit report.
* Understand that as a nonprofit organization, CCCS receives funding from creditors who participate in DMPs. These
contributions are usually calculated as a percentage of payments clients make through a DMP; however, your accounts
will always be credited with one hundred percent (100%) of the amount you pay creditors through a DMP, and CCCS will
work with all of your creditors regardless of whether they contribute to CCCS.
* May be required to pay a monthly fee, asked to make a monthly contribution, and/or charged a file set-up fee,
based upon your state of residence.
* Understand that all deposits sent to CCCS for distribution to your creditors will be deposited in a federally-insured
bank account, and this account may or may not be an interest-bearing account. CCCS will be entitled to retain any
such interest.
* Agree to continue reviewing your creditor statements and CCCS statements while enrolled in your DMP and to notify CCCS
of any errors within 60 days.

I have provided the link, but since I had to create a user name and password to get here I am not sure you will be able to do that.

https://onlinecounsel.cccsatl.org/scripts/AFS.asp

I have an appt. to speak with one of their counselors next week and intend to ask about their ability to raise interest rates, and the possibility of negatively affecting my credit rating, I just had it checked today and it is 670 so I am not thrilled to lower it. But, with two cards at 30%, the idea of dropping that interest is very appealing.

iVillage Member
Registered: 04-26-2007
Thu, 07-31-2008 - 1:54am
If you call MMI, they will not make you wait for an appt. to talk to a counselor.
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iVillage Member
Registered: 07-11-2008
Thu, 07-31-2008 - 8:15pm
Let us know what you find out at the appointment.