Carol wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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“Dear Steve,
What do think of Money Management International?
Are they the same company as CCCS?
I have about 60,000 in debt and I need help my husband hasnt had a paycheck since Nov
I did my own modification on my house back in Jan.
I have no equity in my house they just lowered the payment and gave me a fixed rate for the remaining 27 yrs.
Carol”
The Answer:
Dear Carol,
First, congratulations on the mortgage loan modification. With so many people not getting much help from their lenders, you got lucky.
Money Management International (MMI) is a member of the National Foundation for Credit Counseling (NFCC) and is a Consumer Credit Counseling Services (CCCS) member office.
I suppose what concerns me the most about your question is that your husband has been out of work since last November and now you are thinking of entering into a debt management plan with a credit counseling office to address your $60,000 in credit card debt.
In a typical credit counseling program your monthly payment for your debt would be around $1,200. If that payment does not fit into your current income or expenses, or it leaves you without the ability to save money at the same time you are getting out of debt, then you need to think carefully about using a debt management or credit counseling program to get out of debt.
A credit counseling debt management plan (DMP) only gets you totally out from under your debt if you make all the payments. There is no reduction in the amount that you owe and the monthly payment, unlike a bankruptcy repayment plan, is not developed based on what you can afford.
I am not pushing bankruptcy on you but you need to understand that in a DMP the creditors control the terms offered to you and can change them at any time. The repayment plan created by credit counseling or debt management companies is not binding on the creditors and it gives you no consumer protection or rights. Creditors may elect to not participate in the plan as well.
Entering into a debt management plan takes faith that you will be able to make all the voluntary payments to your creditors through the credit counseling group. If you don’t you will still be in debt and still in a position where you are living with money troubles and problems.
You owe it to yourself to be as fully informed as possible before you make a decision to enter a credit counseling program. I strongly suggest that you go and meet with a local bankruptcy attorney to learn more about what bankruptcy would mean for you and how you would be able to keep your home. Nearly all bankruptcy attorneys will meet with you for free to discuss these issues.
After your meeting with the bankruptcy lawyer, you will be better educated about the difference in a credit counseling and bankruptcy solution. Only then will you be able to make the best decision possible for you and your financial future.
Please let me know what you decide to do.
