topic Re: debt mgmt program in General Credit Topics

debt mgmt program

nanrobbi — Tue, 22 Jul 2008 21:13:36 GMT

I may enroll in a DMP (debt mgmt program) thru what I think is a reputable org. referred

by my credit union. It will decrease interest rates on cards - but I will still be paying

every month, just at a reasonable interest rate. It has been said it will negatively

reflect my credit only because I will close the accounts in the plan, but as they are

paid my FICO should recover. Does anyone have any experience with this? I don't

want to affect my FICO score more negatively than I need to. Thanks for any

information.

Re: debt mgmt program

Anonymous — Tue, 22 Jul 2008 23:29:20 GMT

I would avoid if at all possible. Are you able to make the minimum payments each month? If so, and if you can scrape together a few extra bucks every month, you'll be better off handling this yourself. You need to stop using your credit cards and figure out where your money is going, if you haven't yet. Track every penny you spend and find ways to cut a few dollars out. You can turn this into a debt snowball and pay them off yourself.

You can call up your creditors yourself and ask for a rate decrease. If they say no, ask what has to happen for you to get a lower rate. Call every month and continue asking the same questions until you get a rate decrease.

If your credit scores are already trashed and you can't make the minimum payments, this may be the route for you. Be aware that they typically charge a setup fee as well as a monthly fee for their services on top of what you pay toward the debt, even if they are not for profit. And also be careful that it is truly debt management and not debit negotiation.. that would really trash your scores.

Re: debt mgmt program

marty56 — Wed, 23 Jul 2008 01:08:06 GMT

It is always better to deal with the CCCs on your own but if you find that DMP is your only option, PM me and I will give information about the one I used.

I greee to stay well away from debt settlement companies.

Re: debt mgmt program

nanrobbi — Wed, 23 Jul 2008 02:18:49 GMT

thanks for your reply. Its a program referred by my credit union, and free to me other than

following their guidelines, having to close out credit and pay them before I even know if its

been accepted by the cc companies. I don't really like it. I have the option of renting a room

in my house or renting my house to "catch up". I don't want to take a huge hit in FICO.

So maybe the other options are better.......... thanks for your input.

Re: debt mgmt program

nanrobbi — Wed, 23 Jul 2008 02:19:56 GMT

I want to "stay away" if possible. I thought it was a good program, referred by my credit

union, no charge to me. What was yours?

Re: debt mgmt program

fishbjc — Wed, 23 Jul 2008 02:46:23 GMT

My program was excellent, only about $15/monthly. My interest was reduced to 4%, no change in fico scores, except upward.

It doesn't matter if your cards say closed, you cannot open more credit anyway. Fico doesn't ding you for signing up with a CCCS. According to the rep at BofA, they will reopen the card when the program is finished.

I used a co recommended by BofA.

Re: debt mgmt program

demi — Wed, 23 Jul 2008 17:45:29 GMT

I am almost finished with my dmp (I think Marty, fish and I respond to almost every DMP question !) and it has worked great for me, I have learned discipline, and survived 3 1/2 years without credit cards and am buying a house). Yes, they make you close your cards. If you don't have the discipline to stop on your own (which I didn't) do you think you can do it now? There are many who can, its obviously your choice. But, don't listen to those who say it will ruin your credit, it won't. As others have said, be carefull who you choose and make sure its a dmp.

Message Edited by demi on 07-23-2008 08:44 AM

Message Edited by demi on 07-23-2008 10:45 AM

Re: debt mgmt program

nanrobbi — Wed, 23 Jul 2008 18:43:01 GMT

thanks for your reply! It seems like a reputable co. One person said that in the FICO scoring

"algorithm" that when you close a card with a balance, it is taken out of your CL, but your UTIL

stays, so you then would be utilizing much more than the credit you have, seemingly making

your score horrible. Yet for a few who posted here, they say it worked and scores are good.

I'm fine with closing the cards, I'm keeping one that already has a low interest rate and they are

fine with that. It will help me tremendously to pay things down, so I really would like to do it,

Should I take the plunge?

- Nancy

Re: debt mgmt program

demi — Wed, 23 Jul 2008 19:03:34 GMT

I should clarify, I think that as I paid stuff off, I may have had minor dips in my score (not sure, that was the only thing I could figure out) but it will be offset right away (I am only talking 4ish points).

Also, make sure to review your statements. The only problem I ever had was when Chase kept moving my payment date around and one month theirs was late...didn't matter because they had been paid way more than minimum before the statement was generated. I just changed the date to later in the month so it wouldn't conflict with the dmp payment dates at the first of the month.

I am sending you a private message with who I used.

Message Edited by demi on 07-23-2008 12:03 PM

Re: debt mgmt program

nanrobbi — Wed, 23 Jul 2008 19:34:38 GMT

would it be weird to call the cc company myself, say I'm about to start a DMP, and ask

what affect this will have on fico? In my pre-DMP agreement it says it may take

3 months for the cc co. to "accept any voluntary concessions on accounts" until

after the 3rd payment, which could result in costs and fees", that sounds scary.

Also it states they could report "not paying as agreed" .

A lot to take in......

Nan

Re: debt mgmt program

demi — Wed, 23 Jul 2008 22:28:09 GMT

Boy, I don't remember anything like that. I would talk to the dmp people first and see what its all about...if for some reason they aren't getting what they want at first, you could end up with more dings. It might be some type of disclosure for just a couple of stubborn credit card agencies as well. Then call the cards I guess.

Re: debt mgmt program

haulingthescoreup — Thu, 24 Jul 2008 00:14:20 GMT

I agree, that needs investigating. It sounds as if you might need to be prepared to pay the hold-outs yourself, at least for a while.

And as another poster said, stay on top of your credit card statements. The DMP might not make the payments in time to meet the due date, causing a string of 30 day lates to appear on your reports. Once you know what day of the month your DMP sends out payments, you might want to ask your CCC's to adjust due dates to allow plenty of time for the payments to reach them and post.

Re: debt mgmt program

nanrobbi — Thu, 24 Jul 2008 15:38:20 GMT

I got a schedule of when payments will be disbursed, and as long as I'm "allowed" to make

my own payment at first, I could watch it and make sure nothing is late. I would never let

it go beyond 30 days. I think the things I "sign off" on prepare you for the worst as it sounds

like each company is different.

I'm going to call today and ask some more questions.

thanks for the reply.....

Re: debt mgmt program

Anonymous — Fri, 15 Aug 2008 17:54:23 GMT

Avoid debt management programs if at all possible. I can almost assure you that they're shady. I joined one way back in 1998. A year later I got out of it but after I recently began monitoring my credit & I noticed some re-aged accounts by original creditors and collection agencies. I couldn't believe this so I immediately wrote to the creditors asking for validation. I finally contacted the DMP and requested that they mail me my payment history. After receiving this information I am convinced that they're working side-by-side with those nasty creditors. The DMP reported that final payments had been made to the creditors on my behalf all the way up until 2003! That's absurd, right? I haven't been a member since '99 so that's impossible. Unfortunately, I didn't keep proof after I left the program. I'm assuming that they both got something out of the deal that they made but all I got was additional years added to the SOL and that sucks. LEAVE THE DMP ALONE. Trust me.

Re: debt mgmt program

Anonymous — Sat, 16 Aug 2008 01:02:59 GMT

I enrolled in one back in February. I have alot of debt. Companies were jacking up my rates to the point where my average rate was in the 24% range. I joined a DMP so I could actually make some progress on my debt. My average interest rate now is probably between 11-12% now. I pay $1261/month, of which $800 or so goes to principal every month. DMP does not affect your credit, although you generally cannot obtain new lines while in the program. That is the tough part. Living without credit is tough. I had close to 60k in debt. After about 7 months, its down to 55k. I have a couple of businesses that are doing well and growing which is allowing me to make payments. I have been trying to obtain business financing to refinance my personal and bring my scores up. One thing to be aware about is that when you enter a DMP, sometimes payment schedules are off. I got hammered with several lates in my first 2 months. Tough to get them removed because I owed them alot of money and am no longer a real customer. That was my mistake.

Re: debt mgmt program

fishbjc — Sat, 16 Aug 2008 18:23:48 GMT

Tai: It sounds as though you've had a bad experience, but many people HAVE not had a bad experience.

Personally, I've had an awesome experience and would suggest this company to anyone. It does NOT affect your credit and the only lines I had to close were the two enrolled in CCCS. I CAN use my other cards. I CANNOT obtain new credit, but CAN obtain cli on current accounts.

I've paid more than 50% down and I'm halfway through the program. I'm going to finish about one year early.

Re: debt mgmt program

marty56 — Sat, 16 Aug 2008 23:38:33 GMT

Perhaps great is is the wrong word but I was in a DMP program for 4 and half years. It worked for my and since I graduated the program, I was able to get a prime Visa card and a good auto loan at my CU.

To be honest my credit problem prior to DMP was util and I didnt have any major derog information on my report prior to DMP.

You have to watch your statments to make sure the payment is paid on time and DO NOT GET NEW CREDIT WHILE IN DMP.

Re: debt mgmt program

Anonymous — Mon, 18 Aug 2008 01:51:07 GMT

Hello,

Can you tell me which company you used.

Thanks

Jen-X

Re: debt mgmt program

demi — Mon, 18 Aug 2008 16:07:23 GMT

I also have had very postitive experience with my DMP plan. I make my last payment on the 2nd of next month, over the past 3 1/2 years my credit has gone from really bad to 690's, good enough to purchase my first home (which I just moved in). Don't listen to those who say it hurts your credit...the only real possible way is by closing accounts. Mine required me to close everything, I have lived without a credit card the whole time...it is possible. I do plan on getting a few, more to rebuild my credit than anythiing else.

Make sure its reputable. Mine was a non-profit that charged $35 a month, they did an electronic transfer around the 1st of the month and everything was paid within a week.

Re: debt mgmt program

Anonymous — Mon, 25 Aug 2008 23:08:24 GMT

Different strokes for different folks! I still would not advise you to enroll in a DMP...just my opinion.