Debt management

Questions and Answers

debt management?

Q) are these companys that take all your debts and put them into one easy payment any good, wot do they get out of it. do they cover court fines

A) Myth: The debt management companies on TV, like AmeriDebt, will save me. Truth: You may get out of debt...but only with your credit trashed. Debt management companies are springing up everywhere. These companies help "manage" your debt by taking one monthly payment from you and distributing the money among your creditors, with whom they've often worked out lower payments and lower interest. This is not a loan as with debt consolidation. Sometimes people get the two confused. However, because Americans are up to their eyeballs in debt, the debt management business has become one of the fastest-growing industries today. Companies like AmeriDebt and Consurmer Credit Counseling Service can help you get better interest rates and lower payments, but at a price. When you use one of these companies and then try to get a Conventional, FHA, or VA loan, you will be treated the same as if you had filed Chapter 13 Bankruptcy. Mortgage underwriting guidelines for traditional mortgages will consider your credit trashed, so don't do it. Real debt help is found only in changing your behavior. In short, debt management companies are out. Hard work is in. Change your financial behavior and change your life...for good. True debt management is about one thing - you controlling your money.

Debt Management Plans???

Q) I was in a debt Management Plan and stupid let my payments fall (due to circumnstances and unexpected treatment that i had to have) and now they have teminated my plan. Where do I go from here??

A) Did you set this plan up yourself with the creditors, or did you go to a debt counselor? I'd go to the counselor if you had one, and explain what happened, and ask if another plan can be set up. If you did it yourself, write your creditors and explain the situation, and ask to set up another plan. Then stick to the plan as much as you possibly can. If you have to get a 2nd job, do that. Give up smoking and drinking and parties with friends and trips to the casino and lottery tickets. If you have a cell phone, disconnect the wall phone if possible. And if something else comes up that you can't avoid, contact the creditors or debt counselor AHEAD OF TIME, IN WRITING, and let them know beforehand what's happening. Creditors really, truly, want to work with you on this. It's cheaper for them to waive a payment now and then, rather than to turn a loan over to a collections agency, or repossess a car or a home. But they can't work with you if they don't know about the situation. So YOU have to take the first step.

Is debt management a bad idea?

Q) Hi there, i am in big debt and i have approached a debt management company who were really helpful. Anyone been there and can give me advice before i go ahead? i have doubts

A) There are a lot of good debt management companies out there who will give you good advice and put your finances back on track - they do charge a fee and why shouldn't they, try walking into a solicitors office for free advice, you would be shown the door, people have to pay for services and knowledge and if it sorts out your finances and helps you not to get in the same position again, I would say its money well spent.

Should I choose a debt management plan or bankruptcy? I live in England.?

Q) Apart from humiliation and a 6 yr freeze on my credit rating which basically is shot to shit anyway, what else do I have to loose? My debts are about £12,000, but to me they may as well be £1,000,000. Because I was unable to work for 3 yrs and on incapacity benefits, a few credit card balances spiraled out of control ,due to lack of understanding and inability to cope at the time. I've managed to claw my way out of he unemployability trap and I'm back at work but my pay is'nt what it used to be and it will take time, confidence and training (paid by me!) to get on top of thigs. Im a lone single girl so life, especially rent is expensive. I started a debt management plan with 'Consumer Credit Counselling Service' when I was unemployed cause I was determined 2 take responsibility. They've been very supportive but I feel its taking its toll , as I can't afford things like a secure place to live, further training, driving lesssons, or holidays etc..and I have another 7yrs to go..

A) CCCS are great and they are the best company to deal with when trying to repay debts - don't go for bankruptcy unless you absolutely have to - your bank account will be closed and you will find it close to impossible to get any lines of credit in the future. Speak to CCCS about offering a 'full and final' settlement to your creditors, basically you offer a percentage of what you owe and they 'write off' the rest - well worth a shot!

Should financial planning and debt management be taught in schools?

Q) It's far to easy to get into masses of debt nowadays with loans credit cards and store cards. Also with bankruptcy at a new high in the last year isn't it time we did more to educate our children at school about the dangers of spending more than you can afford?

A) Excellent question and excellent idea. I agree with you that our society does need that type of program in the schools for exactly the reasons you stated.

getting a loan when on a debt management plan?

Q) if your on a debt plan is there any way any one could get a loan for a buisness.

A) No if you are on a debt plan then you are not allowed any further forms of credit until the plan is complete

My daughter has applied to a debt management company?

Q) I am pleased that she is taking action to resolve her difficulties but feel I have let her down badly - I thought she would have known better than to get into such serious debt. This means for five years she will not be able to get a mortgage - she will be 28 before she can even apply - would it be better if I got out a loan and helped her out - I could not afford to do it for both my daughters though - the other one is very sensible with money so I feel that I would be letting her down too by seeming to favour the other

A) I'm answering this from your daughters perspective, I have been there, and my mum didn't help me out at all, she let me make the mistakes, and then let me sort them out on my own. Although you think it's 5 years and then everything is fine...it's not. Debt management in itself, is forcing those who are owed money to accept less each month than they would normally require...it is legal, but that's not to say it doesn't affect your credit history, because it does...BADLY. Her credit file will be marked down badly each month for 5 years, and although you assume it will then magically go back to perfect credit, it won't...it will stay bad, and finance companies will not touch her. It has been 7 years now since I went through the debt management process, and I am still unable to get even the simplest credit...a mobile phone contract for example. I have a mortgage with my partner, but we had to use a company who takes less than perfect credit, and my parents had to lend me £28,000 as a deposit on my behalf, because no creditor would touch me without such a hefty deposit. Things will start to get better now I'm paying on a mortgage, but I can't ever see myself having a credit card, cheque book or anything "normal". I wish my mum would've paid off all my debts at the time. My life would've been easier...BUT, I may not have learnt my lesson, because I wouldn't have had to struggle...who's to say I wouldn't have got into debt again and again?? At least now I know I can't do it, because there's no one out there to give me the credit in the first place!

Debt Management agreements?? has anyone done one?

Q) It sounds too good to be true, their going to sort out all my creditors and I only have to pay £290 a month for 4 years, I owe just over £13000 to various companies and these will all be sorted for me, I know I will get a bad credit rating from this but I have a bad one already so what is the difference, has anyone else done this and do they really do what they say they will do?? advise please.

A) I got started on one late last month and my first payment is coming up. Before jumping in I did my "homework" first by reading plenty of articles about DMPs and selecting an agency. It is very important that you check the credentials of the agency in question...ie are their counselors certified? Is the agency legit? etc. It is also important to go through a non-profit agency. A for-profit agency will charge higher fees and might possibly pocket a portion of your payment rather than pay your creditors. My parents tried a DMP through a for-profit agency and had to file bankruptcy to stop them. The agency they used were notorious for pocketing payments and not paying the creditors on time or not paying them at all. This kind of thing can still happen through a non-profit, but it is less likely. The agency I'm signed up with is Money Management International. www.moneymanagement.org

What is the best debt management company,that doesn’t charge. For people in a round £13k worth of debt?

Q) Also when you get the right comany, how do you stop them from taking most of your monthly salary off you?

A) Try Consumer Credit Counselling Service (0800 1381111), National Debtline (0808 8084000) or Citizens Advice (www.adviceguide.org for advice or to find local bureau). They all give free advice and can negotiate on your behalf with creditors. "Debt management companies" are profit-making organisations who WILL charge you, so avoid them.

How good are Debt management companies?

A) It depends on how bad you are now. Consolidating means creating a whole new loan for a longer period of time. This would hopefully lower your payments enough so you can get back on track, in this case it might SAVE your credit score. A credit counselor will give you some tools and suggestions for reducing your payments, just keep an eye on what the % are, you want it to be lower than what you pay now. However, debt consolidation can be nothing more than a way of putting off the evitable. It really does little to correct the problem. That's why many people come back to debt negotiation as a way of getting out of their financial problems and starting fresh start. More here: http://finance.ebookorama.com

Debt Management?

Q) I have about 20K in Credit Card debt. I have no problem in making the monthly required payments. I thought about taking a loan and then paying the loan off, but I don't know who will give me a loan that big considering that I only make 30K per year. I have a very descent credit score (above 600). What is my best option to get rid of this debt? I am very skeptical about those debt consoldation companies.

A) Cut the plastic in half, then set a goal to eliminate both halves. When you find yourself in the hole, quit digging. You need to cease use of the cards, list all the balances highest to lowest. Pay the minimum on those at the top, use a debt snow ball to pay off the smallest first. see www.daveramsey.com

Debt management?

Q) Could some tell me of a good DM place to use, the net is full of sites and it's overwhelming. An honest one that has no horror stories attached to it. My CC bills are always paid on time but the rising interest payments are hurting me to the point in a few months they will be very hurtful. And yes there was a medical issue with my wife that started this neverending cycle of revolving debt. There has to be a few recommended places and places that people have used with success. I have a card that I got a pamphet in the mail that is raising my % to 32.99 because I am using over half the balance, never have been late and never overdrawn. I talked to the company and the women said it's like that because they can. Yes I know the DM will sting my CR, but.........what'll hurt it worse? Thanks. Not everyone in big CC debt are bad people, just sometimes unlucky. what company did you use and do you have any personal stories good or bad about them. I'm still weighing my options.

A) I agree totally with you. Borderline entrapment if you ask me. For what it is worth this might help. There is a free download software look at my profile for the url finance. The software gives you a perspective of where you are with your debts and gives a strategy on how to clear them. Its shareware software that I used with some success. It just might help you.

Debt Management Mistake?

Q) HI, I was wondering if you can help. I have a very poor credit score. Basically I got myself into a financial mess around 2 years ago and had to contact a debt management company. i am now on a debt management plan. At the time i wasn't on a good salary and had nowhere else to turn. However I am now earning double what i earned then and don't feel debt managment is the right way to go for me now as it is not improving my credit rating. I have never missed a payment with the Debt Management Company. They charge me £40.00 per month for using there service. I have 3 years left of the plan but i would prefer to clear my debtors by consolidating meaning my credit would be improved quicker. Does anyone have any advice if this is even possible to do?

A) Consolidating is a good idea. Most creditors (and their collection agencies) are willing to accept settlements, or a smaller portion of a debt that is owed. Here's one idea: Apply for a loan with a company like CitiFinancial (a lender with more lenient credit terms than most banks) and use the money to pay off the remaining debt. Then pay the loan off using the money you were sending to the debt management company. Your delinquent debts are paid and you're building credit history at the same time. Good luck! Note: Credit entries by creditors can be deleted once the debt is paid, IF YOU REQUEST IT. You don't have to let it sit on there for 7 years. Just remember to ask for a CBR delete and a settled in full letter once you pay the account off.

Debt Management Workers or Fianancial advises if there are any out there.?

Q) Last year I had an accident and had to stop working since that Ive struggled to keep up on credit cards, 2 months ago I applied for debt management. The 1st months payment they keep as deposit and then the 2nd months payment is split between your creditors, 1 of the creditors has accepted the offer, but one of them wont leave me alone they are saying that I still owe this money whilst the debt management programme is being set up the problem is I have given all my money to this debt management company (DMC) that has told me they will call them and talk to them which I think they do. The problem is this company keep on sending me letters saying that I owe them this money and its got to a Credit Reference Agency. I have called my DMC who have said they are waiting for their first payment (due any day) then they will discuss future payments and that as long as Im making a payment I can afford theres nothing they can do is this true? Im being told one thing from DMC and another from Credit

A) Hi, these articles might help: Debt Consolidation - Get Out Of Debt http://www.askaquery.com/Answers/qn1643.html How to Hire a Debt Counselor? http://www.askaquery.com/Answers/qn1584.html What is Debt Relief? http://www.askaquery.com/Answers/qn1583.html Debt Management and Building Wealth http://www.askaquery.com/Answers/qn1581

Have you ever heard of debt management (not debt consolidation) and if so, do you think it is beneficial? Why?

Q) I make about $55,000/year and I currently owe approx. $34,000 in credit debt alone. That's not including my car and student loans plus I still have rent to pay etc. I do not want to file bankruptcy if I don't have to. I also would like to stay away from consolidation. My credit is average considering I have a high debt to income ratio, but I pay my bills on time. Today, I was told by a company that they have something called debt management. I've never heard of that, but they said unlike debt consolidation where they lower both your interest rate AND balance, all debt management does is get the creditor to lower the interest rate. I would pay a monthly payment to the company and a monthly fee and they would make my payment for me. At this point, I can only make minimum payments and my balance is going nowhere...Should I give debt management a try? What are your thoughts and please state why or why not. They said this will not negatively affect my credit score.

A) I've used a debt management program from CareOne Credit. It was the best thing I've ever done. They worked with my creditors, reduced my interest rates and consolidated all of my debt so I only had to make a single monthly payment. I was able to pay down about $10,000 in debt in three years. It helped me become disciplined about managing my bills and credit and forced me to stop using credit cards.

Have you ever heard of debt management (not debt consolidation) and if so, do you think it is beneficial? Why?

Q) I make about $55,000/year and I currently owe approx. $34,000 in credit debt alone. That's not including my car and student loans plus I still have rent to pay etc. I do not want to file bankruptcy if I don't have to. I also would like to stay away from consolidation. My credit is average considering I have a high debt to income ratio, but I pay my bills on time. Today, I was told by a company that they have something called debt management. I've never heard of that, but they said unlike debt consolidation where they lower both your interest rate AND balance, all debt management does is get the creditor to lower the interest rate. I would pay a monthly payment to the company and a monthly fee and they would make my payment for me. At this point, I can only make minimum payments and my balance is going nowhere...Should I give debt management a try? What are your thoughts and please state why or why not. They said this will not negatively affect my credit score.

A) You've recognized you have a problem and that is always the first step. There are certain debt management companies who have been cited for fraud. Be careful who you choose. Look for any complaints filed with the BBB before paying for the services of debt management company. Debt management services can be expensive and may not produce the results you need. Try the suggestions given at www.MoneyExposed.com. If you are committed to reducing your debt, you don't have to spend thousands of dollars to do it.

Debt Management and Consollidation?

Q) Is this option preferable to chapter 13 or chapter 7 bankruptcy? Even if you go through a reduced payment agreement through a debt management company, doesn't this stay on the credit report negativley, just as much as bankruptcy?

A) NO, it shows that you are least trying to pay your bills

What do I do if the debt management company doesn't make a payment for me on time? Can I sue them?

Q) In early 2006, I signed up with a company to consolidate my credit card debt. The full amount was around $12,000, and that's spread out over six cards. This year I started making a good bit more money, so, in May, I called the debt management company and asked if they'd take an EXTRA payment from me that month, as soon as possible, in order to knock off most of the debt on two credit cards. I thought I was clear and repetitive, but somehow they managed to ONLY pay those two cards that month of May and none of the others. Now Bank of America has told me that this has been negatively reported to the credit bureau. The debt management company, who made the error, is telling me, in so many words, that it's my fault and that there's nothing they can do. They tell me to call Bank of America, while Bank of America just shrugs and says, "We just report what comes in and what doesn't." I asked for a call back from a supervisor at the debt management company, but there's been none since I started asking last week. I threatened to sue them, and they told me, in so many words, that that is not an option. Can someone make a mistake that injures your credit rating and not be held accountable? I never missed a payment until now.

A) There responsible and they better fix that mess they made with Bank of America for you. There is what's called the New Uniform Debt - Managment Services Act. Basically what has happened to you has happened to many other people and worse. You can report them to the Federal Trade Commission to begin an investigation. If they find they committed any wrong the FTC will take care of it for you. For the record next time you want to change the terms of your agreement with anybody make sure to do it in writing and send it certified mail. They can always say they never spoke to you. You can definitely take them to court but try the FTC first.

Debt Management Co's?

Q) Do these legitimate debt management companies, like Clearadebt, help get your credit score raised after you pay off the total amount owed??? In other words will they get the credit card companies to remove the "bad" things on my credit reports once they are paid in full?? Thx!! :o)

A) Try this. When you call these companies, tell them that you want IN WRITING a guarantee that they will raise your credit score and remove bad items from your credit report once the bills are paid. And that they won't take any money unless these things are accomplished. You won't find anyone who will agree to this. Why? Because they can't possibly promise such a thing. There are only two ways to get a negative item removed from your credit history. 1) The creditor must delete it 2) The creditor fails to respond to an investigation request from the credit bureau. Note that payment of a bill does NOT remove the item. It only changes the status from being late or in collections, to paid. But it still reflects late payments or collections. It's still a negative item. These "credit repair" companies will TRY to negotiate a payment arrangement that will TRY to remove the negative items. But there are no guarantees. But it is a guarantee that these companies will demand payment for their services, whether they succeed or not. Before you go this route, do your research. Many of the things that these companies do, you can easily do yourself. Also note that many of these "credit consoler" or "credit repair" companies are a front for companies offering consolidation loans or other such services. Be aware of what's going on!

when will people realize debt management companies are worse than collection agencies?

Q) it strikes me as odd that people think these companies actually help them...you as a consumer can do anything that debt management companies can do on your own.. As a collector, I understand that bad things happen to good people and they cannot get out from under debt..what a lot of people don't realize is that turning to a debt management company can hurt you even more...by stop making payments on your accounts and let them handle the account is not the way to go...if you are only 30 days behind and they tell you to stop paying because they want to wait until you've saved up enough to settle, this is damaging to your credit because the acct has probably charged off by the time you settle....yeah you may pay less but, you can negotiate with creditors yourself and most of the time prevent the charge off..and not pay a fee...remember, no such thing as not for profit..always someone trying to make a buck!!!

A) You are 100% correct. As a licensed mortgage consultant, I see credit from A++++++++ to F. The one major thing that keeps people from getting a loan is consumer credit counseling/debt management. I have had customers with A+ credit get denied because they have been in debt management in the last two years. They are scams, they tell you not to pay your payments and then negotiate down the fees and interest on your behalf and pocket the difference and never tell you this. They are getting rich off of things you can do yourself. Good credit is your best friend, do everything you can to keep it clean of debt management companies.