topic Re: Debt Management Program (DMP)- Do they work? in Rebuilding Your Credit

Debt Management Program (DMP)- Do they work?

Brickbybrick — Fri, 03 Apr 2020 17:02:54 GMT

Good morning Fico Fam,

I'll cut to the chase, I have $8500 in credit card debt and all of them with interest rates north of 20% which has made it very hard for me to pay down. I took initial consultation from both Greenpath (The Credit Union I work for is affiliated with them) and Money Management Internation. MMI gave me a better impression overall so I am going to be going with them on Monday.

I would like to know if anyone has experience with these companies, currently enrolled and would be able to give me feedback. I'll make sure my onboarding is smooth and not miss a payment. Apart from that, they can bring interest down to 3-10% on most cards. I like the idea of being able to pay more when possible which I intend on to pay the debt down faster.

I am doing all of this because I intend on purchasing a home in the next 2 years. Thank you.

Re: Debt Management Program (DMP)- Do they work?

Brickbybrick — Fri, 03 Apr 2020 22:29:16 GMT

I decided to keep my Amex so I have some line of credit.

Re: Debt Management Program (DMP)- Do they work?

RSX — Fri, 03 Apr 2020 22:58:32 GMT

Hi and welcome

you will likely.be able to get all the advice and plans you need from this forum and won't have to pay for a debt service

also, some of these debt services get you to stop paying all creditors, which will give you Late Payments that last for 7 years

before you sign on with them

1. Browse this forum heavily. There are tons of answers already here

2. List out your CC's, loans, all outstanding debt. List the creditor name. Amount owed. Total CL. And interest rate for each

then specify how much you have leftover after all minimums are paid

many people here will help you with a plan

when you find some posts with similar requests, you will see the format we need.

with that low amount of debt, you should be in good shape soon.

Re: Debt Management Program (DMP)- Do they work?

RSX — Fri, 03 Apr 2020 23:00:25 GMT

Also, get this spreadsheet or something similar to help you track payments and progress

https://www.vertex42.com/Calculators/debt-reduction-calculator.html

Re: Debt Management Program (DMP)- Do they work?

FireMedic1 — Fri, 03 Apr 2020 23:21:18 GMT

Do not use a credit fix service. All they do is slam the CRA's with disputes hoping they will be deleted. Once your credit card companies see this. They may and I mean may lower the interest rate to be paid off. And still close the account. List the accounts like this:

Creditor/Credit Line/ Balance

Post how much you can apply on a monthly basis. Also theirs plenty of jobs out there to get part time work to help get this in the past.

Re: Debt Management Program (DMP)- Do they work?

Brickbybrick — Sat, 04 Apr 2020 11:49:11 GMT

I did extensive research, Money Management International and Greenpath are not debt settlement companies. They speak with the creditors and work on lowering interest rates. They said I should call my creditors and close my accounts which honestly I don't mind. I have been paying a little over the minimum for quite some time and have not gotten anywhere. I will keep just my Amex for emergencies and put the rest on the program to finally pay it off in full.

Chase Freedom 2467/2500

Chase Slate 1940/2000

Merrick 1058/1100

Capital One 1053/1100

Amex 945/1000

Blue Nile (Comenity) 597/800

Credit One 487/600

Jcrew 0/250

I make $1500 every two weeks with my expenses:

1300 Rent + 385 Car + 0 Student Loans on deferment + 150 Insurance + the cards

Re: Debt Management Program (DMP)- Do they work?

Anonymous — Sat, 04 Apr 2020 18:13:08 GMT

If you close accounts with a balance to try and pay them off afterward, you're going to eviscerate your scores, because you'll show balances against available limits of $0. Everything goes instantly to maxed.

Id really urge you to reconsider and at least try to negotiate the lower APRs yourself first. Pay minimums plus $5 on all but one account (I'd start with the lowest balance first), and hammer that one with as much as you can to get it paid off. Then roll that money into the payment on the next lower balance and continue.

Re: Debt Management Program (DMP)- Do they work?

Anonymous — Sat, 04 Apr 2020 18:12:03 GMT

Especially right now it seems like a lot of creditors may be willing to work with people a lot more because of everything going on. You could save that money using that service towards actually working down that debt. As mentioned, closing the accounts with balances is not a good idea at all. I bet you could work something out with each creditor yourself for free. They may have hardship programs. It looks like all your balances are under their credit limits and since you have been making even the minimum monthly payments, I bet you are a great candidate to get some help directly through the creditors, yourself. There's lots of debt repayments strategies. Snowball, avalanche, etc. Whatever extra you have (that you may be paying to someone else for help) could help you get those balances down and even more so if you could get a rate reduction. Those are also good accounts to have. You wouldn't have to work your way back in when you are already there.

@Anonymous wrote:
If you close accounts with a balance to try and pay them off afterward, you're going to eviscerste your scores, because you'll show balances against available limits of $0. Everything goes instantly to maxed.

Id really urge you to reconsider and at least try to negotiate the lower APRs yourself first. Pay minimums plus $5 on all but one account (I'd start with the lowest balance first), and hammer that one with as much as you can to get it paid off. Then roll that money into the payment on the next lower balance and continue.

Re: Debt Management Program (DMP)- Do they work?

Jnbmom — Sat, 04 Apr 2020 18:11:16 GMT

Take the advice .You don't need to pay a company, you can do this yourself. It takes time and work but given the current situation this only helps with negotiating.

Re: Debt Management Program (DMP)- Do they work?

Brickbybrick — Sun, 05 Apr 2020 04:30:05 GMT

Thank you all, I almost signed the documents this morning. I only thought it would be a good idea because I would save so much on interest. They told me payment would be a little over $200 and could pay more to pay down faster. I would save a lot in interest.

But I'll try negotiating myself first. Will keep you all updated, thank you!

Re: Debt Management Program (DMP)- Do they work?

Anonymous — Sun, 05 Apr 2020 05:41:41 GMT

You've got this! Definitely keep us posted!

Re: Debt Management Program (DMP)- Do they work?

FireMedic1 — Sun, 05 Apr 2020 07:27:48 GMT

List out what you owe this way. Creditor/Credit Line/Balance /APR

We're free and can guide you on which way to tackle the debt.

Re: Debt Management Program (DMP)- Do they work?

Nikki66972 — Sun, 05 Apr 2020 18:16:51 GMT

@Brickbybrick "Hindsight is always 20/20"

While you're in the midst of the storm you can get into trouble. If you went with this program, MMI, and still haven't bought your house in 7 years then it's all clear. Your situation is not the worst.

My suggestion is the same as the others, work out a plan with each creditor to lower interest. In three months of payments you can take that $200 and pay off the lowest card and start payments on the next lowest card and so on. You can do this today.

The second thing I see I getting control of your spending. It's a good rule of thumb to not spend more than you can pay off.

I've been through a lot of credit problems, so I know.

Dave Ramsey's Baby Steps are good to follow as well. I've said a lot and I hope you take some to heart. I'm here if you need encouragement.

Re: Debt Management Program (DMP)- Do they work?

Anonymous — Tue, 07 Apr 2020 05:25:55 GMT

Brickbybrick, I agree with everyone here. Stay away from DMP and credit repair companies.

Look, I get it. I do. Prior to first deciding to start working on my credit in February, I gave serious consideration to hiring a company called "Credit repair USA", and this was BEFORE I read these forums. I had a hunch that they were shady and would very likely result in the following:

1. Damage my credit long term

2. Wasting my $$$$ that could be going toward my debt

When I finally made the decision to face the music and actually take the time to read and thoroughly understand my credit report, I came to these forums to learn what the best plan of action was. Not only did I obtain the information I needed from people on this forums, but my understanding of credit has grown expontentially.

Now, I see credit as a tool and not as a way to overextend myself. I now understand that it is a good idea to have 3 months worth of salary squared away. I now understand how to do AZEO. I now understand how people get themselves in trouble by maxing out their cards and going out and getting more CC's. I've not only learned how to fix my credit myself but I have also learned how to avoid the mistakes that others have made.

So, do yourself a favor and educate yourself on debt management, credit, FICO scores, etc from the people here and the threads on here as well. Seriously, take the time to read, read, read, and ask questions on these forums. In my estimation, I've spent probably over 75 hours reading these forums. I would not be surprised if it was more than that.

I went from FICO 8's in the low 500's to FICO 8's in the high 600's in the span of 2 1/2 months. I'm close to the 700 club now. I've spent a total of around $6500 towards my debt.

So, do yourself a favor and invest the time here and the time towards rebuilding your credit yourself.