Is there something less sever than DMP or Bankrupcy that I can do??

[Anonymous]

8 months ago I had $70k in pure credit card debt. After I finished school and got a job, I started putting literally EVERY PENNY of income beyond bare necessities into paying them down, and I now have $55k.  Average effective interest rate is about 12%.

So I guess I am handling it to some extent, but it's waring me down.  I don't have a penny saved for a rainy day.  I pay about $2500 every month to the CC companies. 

Is there any chance at all that I could get my CC companies (the big ones... Chase & Citi) to negotiate lower interest rates or something?  I want to start saving some cash.  I have nothing.  No retirement, no savings, nothing. I'm sick of paying so much to the CC companies, but at the same time, I want this debt to be gone.

This is just stressing me out a lot.  I crunched some numbers, and about $20k of my debt is pure interest that has accumulated over the last 10 years.  I almost threw up when I realized that.

I don't want to do a DMP, since I understand that you stop making payments in these programs, and then negotiate.  But if I miss even one payment, all my rates will explode, since I'm locked into old life-of-the-loan balance transfers.

Is there anything I can do that doesn't mean destroying my credit?  Or is it basically tough luck?

Thanks.

[marty56]

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@Anonymous wrote:

I don't want to do a DMP, since I understand that you stop making payments in these programs, and then negotiate.

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You are thinking of a Debt Settlement Program.  A DMP - Debt Managment program just lowres your interest rate and wont harm your credit in the long term.  IMHO most CCCs wont lower your interest rate so a DMP program is your best bet if you want that done.  The only problem with a DMP is that you must be able to afford the payements since the longest you can be in the program is 5 years.

  I sent you a PM on the company that I used.

[haulingthescoreup]

Also, if you do not yet have a family (or maybe even if you do), think seriously about getting a second, part-time job --Mickey D's drive-thru, WalMart stocker, all that fun stuff. It may not be big bucks, but it can all go straight to paying down your debt. And you'll be too tired to go out and buy anything new. (Been there, done that!)

[Math_Rocks]

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@Anonymous wrote:

8 months ago I had $70k in pure credit card debt. After I finished school and got a job, I started putting literally EVERY PENNY of income beyond bare necessities into paying them down, and I now have $55k.  Average effective interest rate is about 12%.

So I guess I am handling it to some extent, but it's waring me down.  I don't have a penny saved for a rainy day.  I pay about $2500 every month to the CC companies. 

Is there any chance at all that I could get my CC companies (the big ones... Chase & Citi) to negotiate lower interest rates or something?  I want to start saving some cash.  I have nothing.  No retirement, no savings, nothing. I'm sick of paying so much to the CC companies, but at the same time, I want this debt to be gone.

This is just stressing me out a lot.  I crunched some numbers, and about $20k of my debt is pure interest that has accumulated over the last 10 years.  I almost threw up when I realized that.

I don't want to do a DMP, since I understand that you stop making payments in these programs, and then negotiate.  But if I miss even one payment, all my rates will explode, since I'm locked into old life-of-the-loan balance transfers.

Is there anything I can do that doesn't mean destroying my credit?  Or is it basically tough luck?

Thanks.

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As someone just now getting enrolled in a DMP, I am far from an expert. However, marty is right - I think you are thinking of a debt settlement program not a debt management program (DMP).With a credible DMP, they will work with the creditors to negotiate lower rates and payments* in exchange for closing all unsecured debts (except possibly one for emergencies) and their confidence in the DMP that they will get all the money they are owed. I think in this economy with rampant defaults, some of these creditors want people to go the DMP route!

IMO, this is definitely something you should look into to. For us, if we go with the recommended plan, we will save almost $3800 in interest just in the first year! (Just so you know, my only hold up is coming up with the $ to get started.   )

Best wishes! You will get through this and be much, much smarter in the long run.

* I have found that most DMP's talk about lowering payments and interest. In our case, there would be significant reductions in interest rates but our overall payments would only decrease about $50. I was surprised and discouraged about this but it really depends on a case-by-case basis and what the creditors will demand in exchange for agreeing to the DMP. Just wanted to let you know that up front.

[Anonymous]

I've been in a DMP for the last 6 months. The hardest thing during this time is making sure all the CCCs do as they agreed to do in the proposals - charge the right interest, etc. I haven't seen any kind of direct credit benefit in this time - aside from the fact that I'm paying stuff down for sure. But I have tons of hope that my score will slowly start creeping up after my first anniversary.

[marty56]

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@Anonymous wrote:
I've been in a DMP for the last 6 months. The hardest thing during this time is making sure all the CCCs do as they agreed to do in the proposals - charge the right interest, etc. I haven't seen any kind of direct credit benefit in this time - aside from the fact that I'm paying stuff down for sure. But I have tons of hope that my score will slowly start creeping up after my first anniversary.

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It will be slow at first, depending on how much debt you had and how aggressive the payback plan is but once the first CC is PIF, things will happen and happen fast.  As good as the feeling that the first CC is PIF, each CC that is PIF in turn will feel better and better until the last one at which time you will feel like a great weight has fallen of you.

[newstart2010]

My mother is going through the same thing with Chase and Citi.  25k in debt, and they jacked her intrest rate to 29.9%.  They told her the only way they would work with her is for her to go into some sort of financial counseling service.  The problem is her accounts would be closed, and she is pretty sure she will not get credit with them again after everything is paid off. 

[marty56]

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@newstart2010 wrote:

The problem is her accounts would be closed, and she is pretty sure she will not get credit with them again after everything is paid off. 

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Trust me when I say that after your mom finishes the DMP program, she won't have any desire or need to go back to Citibank, or any of the other CCCs that she had in the program.  I will never deal with Citibank, BofA or any major bank again.  My CU and GEMB gives me everything I need.

[smallfry]

bogfrog no matter how you decide to handle this situation try to remember one thing. The 15K you have already paid has no bearing on your decision.

[newstart2010]

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@marty56 wrote:

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@newstart2010 wrote:

The problem is her accounts would be closed, and she is pretty sure she will not get credit with them again after everything is paid off. 

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Trust me when I say that after your mom finishes the DMP program, she won't have any desire or need to go back to Citibank, or any of the other CCCs that she had in the program.  I will never deal with Citibank, BofA or any major bank again.  My CU and GEMB gives me everything I need.

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Never know.  She ahs been screwed by banks and companies before, and happily gone right back to them.  So it all depends on how she feels after this round.  Hopefully she doesn't.  But I know she is blacklisted from the good guys now because of past bankruptcy and other stuff.