Before You Sign Anything: Run any debt relief contract through the free Contract Decoder to spot hidden fees and unfair terms. Check the company’s complaint history with the Scam-O-Meter.
Compare Your Real Options: Most debt relief companies won’t tell you about all your options — especially the ones they can’t profit from. Credit counseling has a 21-27% completion rate. Settlement resolves about 1% of enrolled debts fully. Bankruptcy has a 95% discharge rate — and protects your retirement. Take the Find Your Path quiz for a recommendation based on your actual numbers.
Key Takeaways
- Federal law protects disability, Social Security, pensions, and VA benefits from debt collectors—this money cannot be garnished
- Non-profit credit counseling groups have prearranged relationships with creditors and may not disclose that your income is protected
- Being judgment-proof doesn't mean consequence-free—you can still be sued and liens can be placed on property
- Credit counseling payment reductions aren't as dramatic as advertised—sometimes payments even increase
- Bankruptcy can discharge all debt in about 90 days and close the door forever
- Gather facts from multiple sources (HELPS law firm, credit counselors, bankruptcy attorney) before deciding
Full Transcript
Click to expand transcript
Steve Rhode: I’m Steve Rhode, your Get Out of Debt Guy. If you’re listening to this podcast, you probably want to learn more about money, credit, and debt, or you’re one of the many good people out there with bad debt and you want it to go away.
Reader Question from Arianna
Steve Rhode: Arianna wrote to me through my website at getoutofdebt.org. She said, “I’m living on permanent disability and dealing with credit card minimum payments that are eating most of my monthly income. I’ve been told that ACCC, American Consumer Credit Counseling, the non-profit organization, is great at reducing interest rates and monthly payments by 50%. Is that true? Are they reputable? What could this end up costing me in fees?”
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What Credit Counseling Groups Don’t Tell You
Steve Rhode: Well, Arianna, if you’ve already talked with a credit counseling group or ACCC, I hope they made it clear that you might not have to repay your debt at all. Federal law protects disability income from collections. However, given your specific situation, it might be financially safer to manage to deal with collectors than spending disability money on debt that does not have to be repaid.
Eric Olson is the executive director and attorney of the non-profit law firm HELPS. He previously posted an article on my site titled “When Bad Debt Advice Hides Behind Good Advice.” Eric’s post was about a 70-year-old woman that repaid $63,000 worth of debt through a non-profit credit counseling group that put her in a debt management plan.
Eric said: “Most seniors don’t understand that federal law protects their social security, pensions, disability, and VA benefits from debt collectors. This money is protected for seniors. It cannot be taken or garnished.”
He went on to say: “Non-profit debt management companies advertise free services or a minimal monthly fee to help people in debt. But what they don’t disclose is that they have a prearranged arrangement with the credit card companies and other lenders on whose behalf they collect.”
The Other Side
Steve Rhode: I’m not saying ACCC is acting in bad faith here. When it comes to delivering a debt management plan, I think they’re as competent as the best in their field. But that’s not the issue here. We need to figure out if you should consider a debt management plan with any nonprofit credit counseling group at all.
Money Management International, another credit counseling group, said in the comments to Eric’s post: “Just because a consumer receives protected income doesn’t mean they cannot be sued or lean placed against a property if they are a homeowner. The decision to default on debt comes with consequences, including credit and legal, which should be carefully researched and considered.”
That is an absolute true statement.
What To Ask
Steve Rhode: I have found that in general, a non-profit credit counseling debt management plan can reduce the interest rates and give you one monthly payment. Payment reductions are not as significant as they used to be. Sometimes monthly payments can even go up. Any non-profit credit counseling group can offer you similar benefits, since it’s the creditors that dictate the terms. The credit counseling agency is not calling the shots here.
Here is what you should ask whoever you contact for help. You should say, “I live on permanent disability and I live in [your state]. I’m struggling to make ends meet each month and I can’t afford the minimum payments on my disability income. I’d really like to hear your opinion if I’m judgment-proof and if my income is protected. If it is, how can you help me deal with collectors?”
The Bankruptcy Option
Steve Rhode: If you find out that you’re judgment-proof and could stop paying your creditors, which makes more financial sense for you given your income and situation, that’s a legitimate thing to do. But it might be emotionally satisfying to continue to use your disability income to repay what the credit counseling program requires to satisfy your creditors, even if that leaves you limping along.
Another option I have not mentioned yet is that you could file bankruptcy and have all your debt legally discharged in about 90 days. While closing the door on that debt forever, that can give you a lot of peace of mind. To learn more about what bankruptcy would mean for you, you should talk to a local bankruptcy attorney for free.
The more facts you can gather, the better the decision you will be able to make for yourself and your situation.
Frequently Asked Questions
Can creditors take my disability income?
No. Federal law protects Social Security, disability, pensions, and VA benefits from debt collectors. This money cannot be garnished. However, creditors can still sue you and place liens on property.
Is American Consumer Credit Counseling (ACCC) reputable?
Yes, ACCC is a legitimate non-profit credit counseling organization. However, like most credit counseling groups, they may not disclose that your disability income is protected from collection.
What does it mean to be judgment-proof?
Being judgment-proof means you have no assets or income that creditors can legally seize. If your only income is protected disability or Social Security, collectors cannot garnish it even with a court judgment.
Should I pay debt with disability income?
That's a personal decision. If you're judgment-proof, stopping payment is financially legitimate. Some prefer to pay for emotional reasons. Get the facts first from HELPS law firm and a bankruptcy attorney.
What is HELPS law firm?
HELPS (helpsishere.org) is a non-profit law firm that helps people on fixed incomes understand their rights regarding protected income and dealing with debt collectors.
If a senior receiving SS and a pension or a person receiving disability contacts a debt management company for help and are not told that their income is protected by federal law and can’t be taken they are not being given complete information. I am glad to hear of MMI’s commitment to advise persons of their protected income. Eric HELPS Nonprofit Law Firm
Ariana, ACCC is a reputable agency. The question is really whether a DMP is viable based upon your budget, providing first for your basic needs. If so, then a DMP may help. If you have not already, you may also want to discuss your situation directly with the creditors to see if they can offer relief through an in-house hardship plan.
Regarding your question on fees, you can find fee information on both ACCC and the agency I work for, MMI, here:
https://www.nerdwallet.com/article/finance/compare-debt-management-plans
Thank you for the comment Thomas.
As information, the senior who was the target of Eric Olsen’s post is a homeowner and was still employed throughout the time she was enrolled in MMI’s debt management plan. As such, was not judgement-proof.
As also mentioned during her FOX26 interview, she still took vacations while repaying $63,000 in just over four years, an indicator that she was fully capable of – and comfortable in – repayment. Additionally, she increased her credit score by 163 points in the process; an achievement that would not have been possible within the same timeframe had she chosen to default on her creditors or declare bankruptcy. Here’s her story: https://www.fox26houston.com/news/pearland-woman-paid-off-63000-in-debt-with-credit-counseling
Ariana may be judgement-proof, but there appears to be no financial parallel between these individuals based on the facts. Eric’s original posted targeted MMI and our client purely on the basis of her age, while the point of his post had no merit based on her actual situation. It was a topic he wanted to discuss based on his own nonprofit’s mission, and he used our client’s success story as an excuse to shoehorn his point. Understandable, but perhaps an overreach, and it should be expected that MMI will defend our client and ourselves.
All that said, MMI will remind our counselors of the judgement-proof scenario in the goal of fully educating those who collect protected income.
Thank you for raising awareness of what it means to be judgement-proof. As the son of a retired senior on protected income, I have the same desire to make sure their rights are understood.
Thomas, The client you mentioned from MMI, is clearly in a different situation. You and I can confidently say that every client’s situation is different and complicated. I applaud your efforts to raise the awareness of being judgment-proof.
I am not pointing fingers at either ACCC or MMI. Instead, I tried to make this reader question serve as an example of an ongoing issue in all segments of debt relief, from settlement, validation, counseling, etc.
Ultimately the debtor has to gather multiple opinions and facts to conclude what solution path is best for them.
Let me be 100 percent clear that for any consumer a Debt Management Plan is the right solution I have faith and trust in both ACCC and MMI to deliver that product.
Should I go with ACCC?
Thank you o much for your question. I also made your question into the podcast of the day.