Ask The Get Out of Debt Experts Credit Counseling

I’ve Talked to Two Different Credit Counseling Groups and Not Sure What to Do. – David

“Dear Steve,

Having CC debit of total $35,563.82 with 13 CC ranging from $280 to $7900. Having contacted with TakeActionAmerican and Clearpoint these two agency. From TAC’s DMP:$795.42 first payment then $745.42 monthly payment for 4yrs and 8 Months,monthly service fee is $30(included).

From CP’s DMP:$895 monthly payment for 4yrs., monthly service fee:$35(included). My current monthly income is around $1000, the living expensive is $250 per month.

I have three questions:
1. Should I paid off the small balances Credit Card like some$200 or $300, without paying the big ONEs?
2. It looks like the TAC’s plan is providing more cushion in between my income vs. payment than the other? But I end up would paying 8 more month…I need your advice to make a decision?
3. Is bankruptcy an option?(I am married with two kids and have one car under both my wife & my name, she owns the house.)

Thank you so much.
David

Attachment: Credit Report”

AMERICAN EXPRESS
Balance:
$6,758

AMERICAN EXPRESS
Balance:
$587

BANK OF AMERICA
Balance:
$1,024

CHASE AUTO FINANCE
Balance:
$3,063

CHASE BANK USA NA
Balance:
$634

CHASE/BANK ONE CARD SERV
Balance:
$1,625

CHASE/BANK ONE CARD SERV
Balance:
$3,451

DISCOVER FINCL SVC LLC
Balance:
$5,098

DISCOVER FINCL SVC LLC
Balance:
$4,433

GE MONEY BANK/CHEVRON
Balance:
$240

GEMB/PAYPAL EXTRAS MC
Balance:
$7,779

GEMB/WALMART
Balance:
$208

NORDSTROM FSB
Balance:
$546

SEARS/CBSD
Balance:
$3,045

Dear David,

At first glance the fact that jumped off the screen at me was your statement “My current monthly income is around $1000, the living expensive is $250 per month.” If your wife would not be contributing towards the repayment of this debt then we first need to evaluate if either plan leaves you with enough income to really live on and save money at the same time.

The ability to save money as you are digging your way out of debt is critical. Unless you can start and build an emergency fund then you will inevitably find yourself in the unfortunate position of having a life emergency and needing some cash to deal with it. Without savings, what are you going to do? All the cards you include in a credit counseling program would be closed so you’d have to probably use another card to pick up that expense. If you do that, you are no longer digging your way out of debt.

See also  I Contacted Clear Point Debt Consolidation for Relief. - Annette

I think you need to realize that both companies are giving you their best guesstimate on what the monthly payment would be. The final payment is up to your creditors. So in evaluating if this is even a path to consider we need to make decisions based on the higher of the two payments. More importantly, does it even seem reasonable that you’d be able to make payments month after month to either plan and survive for the next 48 months on $105 a month?

Can you help me to better understand your overall financial picture in your marriage. What expenses are your responsibility in the home?

Let’s get some clarity on this issue first before we start to look at the best direction to head in.

Just post your answers for me in the comments section below.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

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.

25 Comments

  • Yeah, looks like I have to bring everything onto the table wit my wife and have a serious review of the $$, then will compare all the debt solutions.

  • With your available disposable income it looks like a credit counseling program would be a stretch and probably not be successful.

    So what are you thinking now? Are you going to pursue bankruptcy a bit more?

  • Steve,
    After talking with one of local bankruptcy attorney, I was suggested to consider filing either bankruptcy with Chartper 7 or 13 depend on the community property…going for DMP maynot be the best choice…

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