Debt Mgmt Program

[Anonymous]

I began a debt management program through a Consumer Credit Counseling program and I'm having second thoughts as to whether I should just pay this off on my own.

I owe $6,000 in various credit cartds that have mostly gone to collection.  The CCCP, states that it will take me 21 months to pay them off at about $332 a month.  While it doesn't seem like a huge amount, part of the reason I went with a CCCP was that it will help my chances in getting a house in about three years.  I have no other debt other than a student loan for $11K, which I have been paying on consistently.  No car loan, etc.  My income is ok, I have over $100K in various retirement accounts and I am 

kicking myself for not managing money better.  I'm really great at saving, but I apparently have ADD when it comes to paying my bills.

I am thinking that it would be a better idea if I just paid these off on my own because my score would increase sooner, and help me qualify for an FHA mortgage sooner than later.  What would you do?  Do you suggest I go through the DMP or just pay it off on my own?  

Thanks

[Whitneyy]

Hello and welcome.

I would just honestly pay them myself and work out deals where if you pay them they delete off  your credit reports, called PFDs. I think that will go MUCH quicker, you probably can even settle with some!

[Anonymous]

Thanks Whitney, see that was my thinking.  But then the CCCS people told me that if I settled I would get a 1099 in the mail for the remaining balance of what is owed and I would have to claim it on my taxes, as income to me.  I assume this would raise my fico score quicker than dragging it out for 21 months.  

[sjt]

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@Anonymous wrote:

I began a debt management program through a Consumer Credit Counseling program and I'm having second thoughts as to whether I should just pay this off on my own.

I owe $6,000 in various credit cartds that have mostly gone to collection.  The CCCP, states that it will take me 21 months to pay them off at about $332 a month.  While it doesn't seem like a huge amount, part of the reason I went with a CCCP was that it will help my chances in getting a house in about three years.  I have no other debt other than a student loan for $11K, which I have been paying on consistently.  No car loan, etc.  My income is ok, I have over $100K in various retirement accounts and I am 

kicking myself for not managing money better.  I'm really great at saving, but I apparently have ADD when it comes to paying my bills.

I am thinking that it would be a better idea if I just paid these off on my own because my score would increase sooner, and help me qualify for an FHA mortgage sooner than later.  What would you do?  Do you suggest I go through the DMP or just pay it off on my own?  

Thanks

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There are many benefits using a Credit Counseling Agency. After making around 3 on time payments creditors will bring your account to current status and you will see a score bump. In some cases you can even get your account positive re-aging. You also get a reduced interest rate which makes it easier for payoff and you can make additional payments.

When you negociate a settlement you will be issued a 1099C for the writeoff amount. Since you have a positive net worth you will have to pay taxes on the 1099C amounts.

[rabbirick1232]

1099 ate only required when the "difference" between amount paid and owed is $600 or greater.