I'm in WA State.
I am drowning in credit card debt. I've got several cards I used to finance a business which has gone south since the economic downturn. I've have years and years worth of history of always paying on time for several cards and have not missed a payment to date but I'm getting pinched too much to keep this up.
I have started comparing debt management programs. Currently comparing Clearpoint (a non-profit with good certifications) and a for-profit (Crisis Credit Counseling in CA). Clearpoint has a bit better interest rates on more creditors than Crisis Credit and the fact they are non-profit is making me lean toward them. they also don't require once months payment as a deposit (refundable at the end when everything is paid off).
But here's the real issue. I'm anticipating that if things get worse or don't improve, I may have to sell my home in 6 months to access the equity to pay off my debt (I currently have the largest mortgage possible for my income level.) I am getting conflicting reports as to how a DMP (Debt Management Program) will effect my credit. Some say it won't effect my credit rating, others say it might. This seems to stem from the fact no one can guarantee what each creditor will report and that makes sense.
The program will lower my total payments by about 10% but more important due to the lowered interest rates and simple interest calculation the debt is paid in about 4 years instead of about 20+ years making minimum or near minimum payments. In fact the calculation is that it will save me over $4K in interest the first year! But I'm not sure that savings is that great should entering into a DMP prevent me from getting a mortgage should I need to downsize and switch homes. I would be forced to rent. Which wouldn't be that bad except for the fact now is the time to take advantage of low interest rates.
One agency recommended trying to anonymously inquire with each creditor what their practice is as far as reporting DMP activity on their customers credit report. That seems to make sense but I would anticipate trying to get this information without providing an account number may be like pulling teeth.
I also was able to get a response to an initial question from a Bankruptcy lawyer (via their assistant over the phone - I have not had the full consultation yet) that should I need to enter bankruptcy, they recommend entering a Debt Management Program before filing as that helps you in the bankruptcy process (not sure how and not looking at that option, yet.) So it may be that I'm between a rock and a hard place and aside from selling my home NOW, don't really have a choice and just have to take the risk on what the DMP will do to my credit as far as getting a mortgage for a new home (keeping in mind all my debt will be paid off at that time.)
Can I deal directly with the creditor and get the equivalent deal as I get through the DMP, that is, have the account deactivated and get a lower simple interest rate with about the same payment or less to pay the account off in 4-5 years? I already checked with one creditor about their hardship program, and all it was was a lower payment with no interest change essentially causing me to pay MORE interest over the term and extending the term, plus the hardship I read DOES effect my credit score negatively!
Or, do I have the option to get the same deal as the DMP dealing with each creditor directly to insure they don't screw me on my credit report? I did research and inquire with one creditor about hardship programs but it seems, at least with CHASE, that all it is, is lowering your minimum payment but same interest rate and calculation so you just end up taking even longer to pay it off and pay more interest. What weasles! I'm guessing they do that because the percentage of hardship customers that end up going into settlement or bankruptcy is high so they figure get as much interest income as possible before that happens to mitigate/offset the loss?
If anyone has an insight, experiences, advice into this type of situation, I would greatly appreciate your feedback.
I am drowning in credit card debt. I've got several cards I used to finance a business which has gone south since the economic downturn. I've have years and years worth of history of always paying on time for several cards and have not missed a payment to date but I'm getting pinched too much to keep this up.
I have started comparing debt management programs. Currently comparing Clearpoint (a non-profit with good certifications) and a for-profit (Crisis Credit Counseling in CA). Clearpoint has a bit better interest rates on more creditors than Crisis Credit and the fact they are non-profit is making me lean toward them. they also don't require once months payment as a deposit (refundable at the end when everything is paid off).
But here's the real issue. I'm anticipating that if things get worse or don't improve, I may have to sell my home in 6 months to access the equity to pay off my debt (I currently have the largest mortgage possible for my income level.) I am getting conflicting reports as to how a DMP (Debt Management Program) will effect my credit. Some say it won't effect my credit rating, others say it might. This seems to stem from the fact no one can guarantee what each creditor will report and that makes sense.
The program will lower my total payments by about 10% but more important due to the lowered interest rates and simple interest calculation the debt is paid in about 4 years instead of about 20+ years making minimum or near minimum payments. In fact the calculation is that it will save me over $4K in interest the first year! But I'm not sure that savings is that great should entering into a DMP prevent me from getting a mortgage should I need to downsize and switch homes. I would be forced to rent. Which wouldn't be that bad except for the fact now is the time to take advantage of low interest rates.
One agency recommended trying to anonymously inquire with each creditor what their practice is as far as reporting DMP activity on their customers credit report. That seems to make sense but I would anticipate trying to get this information without providing an account number may be like pulling teeth.
I also was able to get a response to an initial question from a Bankruptcy lawyer (via their assistant over the phone - I have not had the full consultation yet) that should I need to enter bankruptcy, they recommend entering a Debt Management Program before filing as that helps you in the bankruptcy process (not sure how and not looking at that option, yet.) So it may be that I'm between a rock and a hard place and aside from selling my home NOW, don't really have a choice and just have to take the risk on what the DMP will do to my credit as far as getting a mortgage for a new home (keeping in mind all my debt will be paid off at that time.)
Can I deal directly with the creditor and get the equivalent deal as I get through the DMP, that is, have the account deactivated and get a lower simple interest rate with about the same payment or less to pay the account off in 4-5 years? I already checked with one creditor about their hardship program, and all it was was a lower payment with no interest change essentially causing me to pay MORE interest over the term and extending the term, plus the hardship I read DOES effect my credit score negatively!
Or, do I have the option to get the same deal as the DMP dealing with each creditor directly to insure they don't screw me on my credit report? I did research and inquire with one creditor about hardship programs but it seems, at least with CHASE, that all it is, is lowering your minimum payment but same interest rate and calculation so you just end up taking even longer to pay it off and pay more interest. What weasles! I'm guessing they do that because the percentage of hardship customers that end up going into settlement or bankruptcy is high so they figure get as much interest income as possible before that happens to mitigate/offset the loss?
If anyone has an insight, experiences, advice into this type of situation, I would greatly appreciate your feedback.