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Will Money Management International Pay My Creditors? – Pat

“Hi Steve,

Read many of your comments and glad that you are here to help us. I owe about $45,000.00 in credit card debts. None are late but I would like to pay them off in 4 to 5 years instead of forever. I have contacted MMI and they have offer the DMP at $1037/ mo until 2014. I can make this monthly payment no problems and I like the 5 years to debt free plan. I have good job and have no fear of being out of a job. I do not care about my credit score, I can always rebuild them after this and not planning to be in debt ever again.

I have read your article about the success rate of people in the DMP. Is this mean that If I decide to enrole in this I might not suceed. Why? If I know that I can pay every month why would I not succeed. Is the credit card company will later increase my rate to 24% while I am in the program? Will MMI take my money and not paying the creditor?

Thanks

Pat”

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The Answer

Dear Pat,

Rest assured that Money Management International will promptly and properly disburse payments collected from you to your creditors.

If you are going to pay back $1,037 over five years it will total up to $62,220. With that kind of money available you should be able to reduce your own debt within a similar period of time using the debt snowball approach.

The key to getting out of debt quickly is to not reduce your payment from what it is right now and follow the minimum payment down as the creditors reduce it.

By repaying your debt yourself it will improve your credit rating and you’ll retain the benefit of your credit history which accounts for a large part of your credit score. A good credit score is important for a number of reason, and not just to get credit.

Debt management plans are not designed for people that can easily pay their bills but who are looking for a consolidated repayment program. There are consequences to debt management plans and credit counseling programs.

Any payment arrangement or interest rate offered by a creditor through a credit counseling program can be changed at any time and for any reason while you are in the program. It is not a contract or a guaranteed fixed rate.

If you have good credit now, and you are not late then it might make more sense to explore a LendingClub.com fixed rate unsecured debt consolidation loan and get out of debt within three years. The LendingClub.com loans only go to $25,000 but by using that for your highest interest rate debt and then using the debt snowball approach for the rest it should be easy for you to dig your way out without having to pay a credit counseling program to terminate your credit history.

Big Hug!

Will Money Management International Pay My Creditors?   Pat
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Ray

    Steve,

    My wife and I have been on a DMP with MMI for 15 months now. In that 15 months we have reduced our debt by 38 percent. We have never missed a payment and MMI has never missed a disbursement, they have been wonderful. We decided to go on the plan when our creditors started raising our APRs from as low as 3.99 to 29.99 because our balances were so high. We were never late and, in most cases, paid more than the minimum. The problem lies with how the loan is calculated. A credit card loan is revolving and the DMP loans are simple which means more of your money is applied toward principle versus interest. There is no way we could have achieved this without MMI negotiating on our behalf. We contacted our creditors prior to going on a DMP with MMI but they would not budge on their rates. Now that we are back to between 6 and 9 percent interest rates on simple loans, our debt is taking a turn in the right direction. We will be debt free by December of 2011. Had we kept making payments without the DMP it would have taken us 23 years to pay off our debt. By the way, our credit score has always been high (784) and has remained high even on the DMP. This program only works if you do what MMI tells you and you stay on top of it. Nothing comes easy but once you start to see progress you look back and wonder why you didn’t start the program earlier.

    Thanks,

    Ray

    • stacy

      Thank you for the feedback on MMI. I was a little skeptical but reading your comment makes me feel re-leaved. I hope to be debt free by July 2013. Good luck in the future!

      Have a good day!

      • Ray

        You’re welcome, Stacy. We are on schedule to be at the 50 percent debt reduction mark in September! The best advice I can give you is (1) stick with the program, and (2) as you eliminate credit cards, use the disbursement money from that card toward another card on the program to speed up the process, do not lower your disbursement amount unless you have to. Our program was estimated to take 5 years, doing it this way will move it up to less than 4! That sure beats 36 years!!! It’s so worth it and it really does work. I hope I do not sound like a commercial :-) Good luck!

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