Is a Credit Counseling Debt Management Plan Good for Rebuilding Credit?


Dear Steve,

I currently owe about $25,000 in credit card debt. I make a decent salary and making the payments is not a problem.

I was recently looking at a loan through Consolidated Credit Corporation. The interest rate is lower and would allow everything to be paid off in 5 years, but I’m worried about the effect on my credit.

I don’t have great credit right now due to have defaulted on a spousal consolidation loan and a lengthy divorce. I don’t want my score to get any lower.

Is a program like that offered by Consolidated Credit Corporation a good idea as far as rebuilding credit? Does it look better to leave the credit cards open and just pay them off?



Dear Melanie,

Thanks for your question. However, it’s a bit of apple and oranges there. A credit counseling debt management plan, like that offered by Consolidated Credit, is a good solution if you can afford your regular payments but are looking for a break in interest rates so you can repay your debt in five years or less.

If you’d like to look at all your debt-relief options, use my online get out of debt calculator.

Since you are able to make your payments without a problem it sounds like your issue is more about rebuilding credit than getting rid of debt.

In that case, you need to read about how easy it is to rebuild good credit.

You did mention what sounds like a federal student loan spousal consolidation loan. Those are a terrible tragedy. See my posts here. With one of these loans, you are wed to your spouse on the loan for life until it is repaid. You are separate but equally liable for the debt and it will be reported on your credit report. Even after a divorce, if the other spouse does not pay the loan you can still be sued over it.

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The good news is if your ex-spouse is making the payments, the longer the time in between when it was last in default then the less it will negatively impact you.

Consolidated Credit runs a very competent debt management program. But you have not told me anything that makes me believe you need a debt management program at this time. It sounds like you just need to focus on rebuilding your credit instead.


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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.
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