Should I Stick With CCCS of San Francisco or Go With the National Debt Relief Initiative and Pathway Financial Management? – Tina

“Dear Steve,

I have acquired some credit card debt and last year found myself not being able to keep up with my payments. I had $34k in debt and went through a program through my credit union called Balance for Debt Consolidation. I started on a DMP July 2009 with Consumer Credit Counseling Service located in San Francisco. I consolidated 5 cards and last month found that I am down to $26k. All of my accounts were closed upon my request before I started the DMP.

While I am glad at my accomplishment, I recieved something in the mail from “National Debt Relief Initiative”. I called and realized I was speaking with someone from Pathway Financial Management. The guy said they, through lawyers, could get my debt balance down and have me debt free in a shorter amount of time. Sounded too good to be true so I did some research and did not like what I read. I

I would like to know if I should stay with C.C.C.S. or should I look into debt settlement. If you recommend debt settlement, what companies if any are reputable? Also, which is the best option for keeping my credit in the best shape? It would be nice to pay off a smaller balance, but at what cost?



Dear Tina,

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

My opinion is that the downside of you bailing out of your credit counseling program and entering a debt settlement approach could be a real negative experience. Right now, while your cards are closed they are also reflecting an on-time payment history, collectors are not calling and you are not facing being sued by your creditors, or in aggressive collections.

The way the debt settlement approach would probably work in your case is a provider would tell you to stop paying your creditors and instead save money to settle or make deposits into an escrow account. When you stop paying you will go into collections and they will chase you for payment. Creditors do sue consumers that don’t pay and you may very well face being sued. I’m not certain that’s what you’d want to do.

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If the settled debt leaves you solvent you’d have to pay tax on the forgiven debt as well. Now, if you had $13,000 cash on hand to settle your debts rapidly then maybe some of that pain could be avoided.

The CCCS program seems to be manageable for you, it’s not a struggle, it seems like continuing on the path you are headed down that your debt will be resolved in a few years.

The decision comes down to this, are you willing to settle your debt and face all the negative consequences of walking down that path if you don’t have the cash on hand to settle quickly. If you decide you do want to settle then you should contact Damon Day and ask for a second opinion about which debt settlement program would be right for you. But make sure you wait till after October 27, 2010 to enroll in any debt settlement program because after that date most debt settlement programs will not charge you till they actually settle the debt.

Please update me on your progress by

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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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