Latest Posts
Home > Ask The Get Out of Debt Experts > I Signed Up With Money Management International and Now I Have Bad Credit. – Anna

I Signed Up With Money Management International and Now I Have Bad Credit. – Anna

“Dear Steve,

About six months ago I signed up for Money Management Internationals Debt Management Program. I pay about a thousand dollars a month and my debt will be paid off in 30 months. I recently saw my credit report and found that because of MMI there have been 12 late payments on my report since I signed up with them back in January.

Prior to my contract with them I only had one late payment. My fiance and I have been looking into buying our first home. Obviously, I am not going to be approved for a loan for a long time now. I spoke with a mortgage broker and he suggested that I seek legal advice against MMI, they have ruined my credit. My credit score is now in the 400′s which means it dropped well over 100 points.

What suggestions do you have for me?

Thank you so much for your time and advice,

Anna”

Don’t miss our free Get Out of Debt – “How To” Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. – Click Here

The Answer

 

Dear Anna,

While I can’t speak specifically about your situation, there are plenty of reasons why this can happen. Most of it surrounds timing issues and creditor inefficiency.

Often times people will run to a debt management program at the last minute when they feel they might not be able to keep current on this months payments. The process of enrolling in a debt management program can take a few days or weeks depending on the efficiency of the credit counseling company and the timeliness of statements, account information and first payment from the client.

Then when you enter a debt management program and the first payment is not received by the anticipated due date your creditors may indicate that payment is past due. Most creditors will reage, or show your account as being current, once you have made three consecutive on-time payments. I suspect the late payments you have observed are from more than one creditor.

Another problem that occurs is that creditors are quick to take the payment but sometimes slow to update their systems to reflect you are in a credit counseling program. This can cause timing and reaging issues as well at times.

I don’t think this process of getting started and the late payments is what may hold you back from getting a loan in the near future. I suspect that you went into a credit counseling program because you were feeling financial pressure. in that case, your credit scores were damaged to begin with. By your own admission it is now in the 400 range and if it dropped as you said by 100 points, you went into the program in the 500 range. A score that is still below prime.

I think the best course of action at this point is to pay off the debt that you owe as quickly as you can. Once these accounts are satisfied and you have money for a down payment and you’ve rebuilt your financial life from where it is, I am confident you will qualify for a mortgage.

The irony here is that you’d probably get a house faster if you went bankrupt. I know, that sounds crazy, but follow along.

Right now your credit score is already in the toilet. Bankruptcy is not going to drive it down much further. In the 400 range there isn’t much further to fall anyway. If your debt was discharged you could spend the next 30 months rebuilding your credit and saving money for a down payment. If you stay in the credit counseling program you’ll make 30 months of payment and start saving for a down payment.

The choice is yours but rather than have a bunch of pent up anger over MMI, I’d suggest that you instead go and talk to a local bankruptcy attorney and learn the facts about bankruptcy. If you discover that bankruptcy makes more sense in your situation then you can just put this MMI issue aside and move on.

Give me an update in the comments section if you have any additional questions about this or to give me an update.

Big Hug!

I Signed Up With Money Management International and Now I Have Bad Credit.   Anna
Get Out of Debt Guy – Twitter, G+, Facebook

I Signed Up With Money Management International and Now I Have Bad Credit. - Anna by

Share This and Spread the Word

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.
  • Terrable

    I’m currently having a hard time deciding between using MMI or filing for bankruptcy. I am $100,000 in debt, 60k in student loans, 30k in the car, and 10k in CC (but high interest rates and overwhelming minimums). My loans are deferred as I am in school again (although not accruing further debt). I feel like if I go bankrupt I should included the car, but I use the car for my second job. It seems like 10k is not enough to go bankrupt for. MMI will pay off my debt in 4 years while slashing my total monthly payment from $500 to less than $200. I have also had recent health problems, (workers comp wrist injury and then a stroke at 30!) that have limited my ability to work as much overtime not to mention being on disability for a few months. Therefore my financial situation is completely overwhelming. If I go this route I will have my car and my CC paid off within 5 years and will be able to start paying off my student loans at that time.

    Given my recent health problems I would like to make this problem as stress free as possible, even if my credit has to take a hit. But I need all the info first.

    Long story short, is it better to file for bankruptcy, (I qualify for chapter 7 and chapter 13), or pay it off through MMI? Which allows my credit score to bounce back quicker?

    • http://www.avoidbk.com/ Jared Strauss

      If I were in your situation, and my credit hadn’t suffered any damage yet (not sure if that is the case here), I would shop around for a debt consolidation loan to consolidate the credit cards before contemplating these other options. A 5-year debt consolidation loan for $10,000 at 12% interest works out to $222.44 a month. So you may be able to accomplish a similar monthly savings without potentially damaging your credit.

      If you go this route, just make sure to only carry around 1 credit card with you going forward. This will help you control your future use of your available credit in a manner that will help you avoid racking up your balances again. Good luck to you and I wish you better health going forward.

      • Terrable

        Thank you so much for responding! I’m really not sure who to ask for advice which is why I’m burning the midnight oil trying to find unbiased information. Bankruptcy lawyer websites say go bankrupt because then that 10k you spent for 4 years can be applied to student loan debt or invested. Also according to them, some creditors are now treating the debt consolidation similar to bankruptcy. I have a hard time believing that but I do see the validity of applying that money to work on my student loans, especially so I can release my cosigner earlier than my current path. If I bankrupt and pay that loan I can have her released in 4 years.

        So my credit actually has taken a hit as I haven’t been able to pay on any CC since my stroke in Nov. (Disability has only covered enough for rent, car and necessities). Prior to my stroke I was almost about to file for bankruptcy but couldn’t make the final decision to do so; had I known the future I would have done so for sure. The silver lining is that my health is now good and recovery is going seamlessly. I am back at work this week and now its time to make some decisions once and for all.

        Other consolidation companies have told me that there is nothing they can do to help me unless I make more money (which I have been trying to since I graduated nursing school 2 years ago). Unfortunately it has become a reality that I may not find that higher paying job, at least not in a time frame to help my situation. Should I be worried that MMI has an option for me? Also, my credit accounts will be closed with MMI.

      • http://www.avoidbk.com/ Jared Strauss

        No worries. As far as filing bankruptcy is concerned: that is a personal choice that only you can make. The most important thing anyone could do in this type of situation is to do exactly what you are doing: research the particulars of your options. I think you’re awesome for doing so.

        So here are the particulars that I see in your situation…

        If you file Chapter 7 bankruptcy, you’ll more than likely be released from any liability with the credit cards. It sounds like you want to keep the car, so Chapter 7 more than likely will be irrelevant for the auto loan. But, double check this with a bankruptcy attorney.

        The cost to file bankruptcy will probably range from $1,000-$1,500. So at the end of the day, you’re looking at filing Chapter 7 for $8,500-$9,000.

        The ultimate question that you want to ask yourself is: what other viable options exist that are within your financial ability?

        In respect to the debt management plan you’re being presented, I think you should call MMI back and ask them for clarification on exactly what type of service they are offering you. I say that because based on the terms you presented above, the numbers don’t add up to a debt management plan. Even if they worked for free and were able to achieve 0% interest on all your credit cards (which is very doubtful), the payment to payoff $10,000 in 4 years would be $208.33 a month. So please seek clarification on this.

        A third possible viable option that you may want to think about is if you can raise roughly half of what you owe at one time to settle your credit cards. If you owe $10,000 today and are roughly 60 days behind, your balances will be closer to $11,000 when they’re in the position to settle (usually when they’re 5-6 months behind). So you could probably settle your debts for $4,000 – $6,000. Is there anyway to generate that amount? If so, how?

        If you start researching debt settlement be very careful. Most debt settlement programs are offered over an extended period of time. They’re inherently dangerous and you need to become familiar with the risks that are associated with the approach.

        Unfortunately, a lot of debt settlement companies that offer a long-term program don’t do a great job of explaining these risks to people, so please see my 4-part series about how debt settlement works to gain a better understanding of the things you need to know about.

        Anyway, get back to me about the clarification with MMI and any other questions you may have and we’ll take it from there…

      • Terrable

        Oh yea, I should have mentioned that I have no assets nor no way to generate income.

      • Terrable

        But I do have more than 20k in a 401k but unfortunately I am paying off a loan through my paycheck. The monthly isn’t too much and it should be paid off in another year or so I believe. I don’t think that I can withdraw or borrow when I have a loan outstanding but I will call and double check.

      • Terrable

        MMI’s terms are $192.24/mo (first payment is $224) for 4 years. Of that $15 per month will go to MMI for fees. They say that they negotiate the interest rates on the cards to 1-3% (which I’m paying an average of 25% right now). The accounts will close but will show on my credit report as being closed by me, per the representative I spoke to.

    • http://DamonDay.com/ Damon Day

      When are your student loans coming out of deferment? Are the loans federal or private loans?

      • Terrable

        I have $40,000 in government and the other $20,000 are private. They are in deferrment because I am taking 6 units of classes to keep them deferred. I think one of my lenders told me that I can only defer them for five years which gives me 3 more years.

        One of my concerns is that my friend, who is a single mother, is a cosigner of my biggest private loan, $13,000. That;s why I am thinking bankruptcy is a better option because I can discharge my CC debt, start paying only the student loan she is on and then by the time my car is paid off, 5 years, I will have monthly income freed up to begin paying the others. If I wait until my car is paid off and a possible debt consolidation is paid off, then it will take me longer to pay off her loan. I feel like I shouldn’t pick my credit over hers because it was my best laid plans that went awry, not hers.

      • http://DamonDay.com/ Damon Day

        Sounds like you have a lot of options. The federal loans do have income based options available to keep your payments to an affordable level.

        So the issue is really, what is the best way to get the 10K out of the way so you can start paying back the private loans because even though you are on deferment, the interest is still growing.

        If you file BK, you can get rid of that 10K right away and start paying those 200 dollar mmi payments to your private loan right away.

        If you settle the debt for 4 or 5 thousand, then you could probably start contributing to the private loan in about 2 years after you settle those debts. (Don’t know if settlement makes sense because I have no idea how many debts you have and the amounts of each)

        Or if you stay with MMI, you will be done in about 5 years.

        A lot can happen over 5 years, so the real question is, what are you the most comfortable with?

        You should also do some calculations with the IBR calculator to see what your payments might be at your current income level

        https://loanconsolidation.ed.gov/loancalc/servlet/Controller?controller_task=startCalculator

        You also need to figure out what your private loan payments will be (with interest added if you continue to defer them)

        Then you need to decide if 3 years from now, you can afford the MMI payment, your car payment, the federal loan payment and the private loan payments all at the same time for at least two more years until MMI and the car is paid.

        If the answer is no, then settlement or BK on that 10K is probably going to make more sense than a 5 year MMI payment.

        One last thing, given your medical situation, I would be hesitant to file for BK now in case you have additional medical issues in the short term that could result in large bills that are not covered by your insurance. Of course you can stop paying your CC’s as you already have, but not necessarily file for BK for another year or two.

      • Terrable

        Another nice thing is that I work at a hospital and have AMAZING benefits through my union… the likelihood of me losing that, and of my health further declining is very low.

        I can definitely not afford all the modified loan payments, private loan payments and car payments with my current salary. (It goes without saying that I have tried to reduce my outgoing, but there really isn’t anymore wiggle room). I hope to be earning more in 3 years, but I can’t plan on that because that is what got me into this problem. (If I can find an RN job I would be making double, but misdemeanors on my record from 12 years ago have proven to be far more of an obstacle than my school projected and I am nearly unemployable in this economy. That’s a whole other subject, but no, I do not have a legal case against the school to try to recover some of my debt incurred getting my useless degree)

        I agree with you, I don’t need to make this decision now. I might wait a little while. It’s really not like I can do much about it now, but I think that debt consolidation is a little risky for me when I may need to still file for bankruptcy if my plan doesn’t pan out to a T.

        It also goes without saying that I have learned my lesson with planning for income that you don’t have guaranteed. I will def keep this in mind as I pursue my next career in computer programming to possibly mesh with my healthcare experience. My goal is to be successful and move on, I’m thinking bankruptcy might be the best option but I may wait a little longer to see if something gives.

        Thank you so much for your response. It is really hard finding knowledgable people to help me make this decision. My family is small and finances are definitely not their forte.

      • http://DamonDay.com/ Damon Day

        Yes, it is good that you are gathering the information though because the MMI type option will not be available to you in a few months, so it is important that you either go with that or decide now to rule it out based on the overall situation.

        I agree that it would be tough to sign up for a plan like that knowing there is no guarantee of future income increases, but there is a definite expense increase coming up in a few years.

        If you want to talk to a BK attorney you can click on http://bankruptcy.getoutofdebt.org

        If you can find one close to where you are. Many of the attorneys in that directory are also familiar with student loan issues in case you need some assistance there when they come due.

  • Pop

    Kim, i have no doubt that your company is a fat SCAM! I myself have done the debt management plan and your “Collectors” Keep calling me for money on this. They say there hired by Money Management International. Your company is not confidential at all! THANKS FOR SCAMMING ME! I am now trapped in your scamming ways! I want a lawsuit against this company As soon as possible!

    Mike

    • debra

      I am in the process of thinking very hard to sign up with MMI. I have all the info from them and I am doing my own due diligence on the truth to their DMP. That said, I am also a member of Mary Hunt’s Debt Proof Living. I am leaning towards the Debt Proof Living’s plan on paying down debt. To those of you struggling with debt I suggest you thoroughly research any of the companies you want to sign up with to pay down debt.

  • Bill Paid

    MMI does provide a “cheat sheet” on what to do when you start the program.   

    When we started the program in 2008, we received a document that we had to sign to enroll that has a “Client Guide to a Successful DMP” which lists what you need to do the first 30 days, at 60 days, at 90 days, and every month.  This information is also spelled out in the document in other places.  The key is communication with your creditors and with MMI.  We needed to change a few due dates so they fell 10 days or more after we paid MMI each month.  We did not have to pay any double payments when we started because we paid our bills on time one month and started the DMP the following month. 

    Yes, some creditors put a note on our credit report that we were on a DMP, but since we agreed not to get any new credit while on the plan, it is fine.  We have paid off over 90% of our $85,000 unsecured debt, and even though some creditors wrote DMP on our credit report, we have great FICO scores (high 700′s). 

    MMI is a great tool to help you get out of debt, but it is not going to do all the work for you.  You have to follow their plan by contacting creditors, keeping up with payments, abstaining from borrowing more money, cutting back on spending (if that is your reason for the debt), forcing yourself to put money aside for emergencies, and learning how to budget successfully. 

  • Eccolibri60

    When I signed up with MMI, they told me what day of the month the money would be withdrawn, and said the payments would go to the card companies within a week. I called the one card for whom the due date was too early, and they were able to move my due date to fit my payment schedule. I have been with them for almost 3 years on a 5 year plan, my debt is going down and my credit rating is going up. It is definitely worth the $40 a month fee.

    • http://GetOutOfDebt.org Steve Rhode

      So glad to hear you got great service and had a good experience. Your feedback is welcome.

      • Pop

        WHAT ABOUT ME I GOT SCAMMED! MMI IS A FAT SCAM! INDIANS!

  • Steve Rhode

    Can you give me a bit more information?

    Are you able to save money at the same time and dig your way out of debt?

  • Bookingclerk

    I am making my payments is it better to struggle a little and pay off the loans myself than to use a credit counseling service will my credit rating go up faster

  • Bookingclerk

    I am making my payments is it better to struggle a little and pay off the loans myself than to use a credit counseling service will my credit rating go up faster

    • http://GetOutOfDebt.org Steve Rhode

      Can you give me a bit more information?

      Are you able to save money at the same time and dig your way out of debt?

      • Khodges2

        Do you know anything about making partial payments… We sent a payment of $500 in the beginning of the month and 2 weeks later the remaining balance of $368 which would be a total of $868. Chase sent a letter stating that they haven’t received even the partial payment for November at all. I am furious as I have no idea what MMI is doing with the money sent to them partially. I don’t agree 100% with their practices and suspect them of holding the payments until they get the full portion so they can pay themselves. Meanwhile this looks totally worse as if I made no payment at all. Hopefully you can give a little insight.

      • http://GetOutOfDebt.org Steve Rhode

        I would suspect they will pay some of your creditors with the partial payment but let’s not guess, my suggestion is that you give them a call.

  • Jody

    Dear Kim,
    Too bad that MMI does not send an easy cheatsheet soon as a person calls them and is considered. This could cut down the complaints people have against your company.
    Perhaps in big print like this:
    “SAVE THIS PAPER AND PUT ON REFRIGERATOR UNTIL YOU MEMORIZE
    #1. Arrange with MMI a due date taken out of your bank account that is 3 weeks before your creditors due date. Maybe slip your MMI date at an earlier time and ask your creditor to make your statement 2 weeks later.
    #2. Ask your counselor if you can you close the debtors account immediately once agreement made with MMI? Get the forecast date of when you can do this and CLOSE IT YOURSELF. This way your credit report will say “closed by consumer”, not “closed by MMI”
    #3. Prepare to not purchase a car and do not open any lines of credit for the term of your agreement with MMI
    #4. Do check your creditors online to make sure postings are done. In the first 3-4 months, it is ok to contact on phone with the debtors to make sure everything is clear regarding the due date and postings with MMI. In the first month, if there is a shortage, pay it with your creditor. Sometimes in the first month you might experience this.

  • http://blog.moneymanagement.org Kim McGrigg

    Hi Anna,

    I am the community manager for MMI; I have worked with MMI for more than 14 years. I totally understand the need to research the role a Debt Management Plan (DMP) plays in your credit reports. While I do not know the details of your specific situation, I will try to address your concerns.

    Creditors are solely responsible for reporting to a credit bureau and each creditor maintains their own policies on what information is reported. Some creditors may update their report to a credit bureau on “past due” accounts to a “current” status after receiving our proposal letter, after your first deposit, or after your third successful deposit. That being said, your credit report is a statement of your payment history. Anytime you do not pay an account as originally agreed, there is a possibility that a creditor may place a derogatory note on your credit report. Since your DMP likely involves reduced payments or waiving of interest, some creditors may report your account as being paid through a credit counseling agency.

    While I do not know the full details of your situation, there may be some solutions to this issue that a counselor can help you identify (such as confirming acceptance or coordinating the creditor due date with your disbursement date). Therefore, I highly recommend that you call and speak with a support counselor about your specific situation—their job is to help.

    I want to let you know that in addition to offering credit and budgeting counseling, MMI also is a HUD-certified housing counseling agency.

    I am not an attorney, so I cannot comment about whether or not you should file for bankruptcy. If you do choose to go down that route, we are approved to deliver the necessary bankruptcy counseling and education sessions.

    Anna, I sincerely wish you the best of luck. And Steve, thanks for the opportunity to comment.

    Kim McGrigg
    .-= Kim McGrigg´s last blog ..7 fun things to do for 50 cents =-.

    • Pop

      YOUR COMPANY HAS SCAMMED ME! I SIGNED UP FOR YOUR DEBT MANAGEMENT PLAN AND YOUR “COLLECTORS” KEEP CALLING ME FOR MONEY FOR MY PLAN. I CALLED BACK AND A SUPERVISOR SAID IT IS CONFIDENTIAL. AFTER THAT THEY STILL CALL. NO ITS NOT. STOP SCAMMING ME!

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.