debt mgmt program

[nanrobbi]

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. 

[Anonymous]

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.

[marty56]

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.

[nanrobbi]

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.

[nanrobbi]

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?

[fishbjc]

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. 

[demi]

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

[nanrobbi]

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

[demi]

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

[nanrobbi]

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