“Dear Steve,
In May of 2007, I contacted InCharge Debt Solutions to help me pay back credit card debts as I was way over extended. At that time I had a good job. I had to have two different accounts with them as one set of debts were in my mother’s name ( she had allowed me to use her accounts as an authorized user, but I was the one actually using the credit ). I was paying almost $1000 a month towards the bills. Then in January 2009 I was laid off…and haven’t been able to find work anywhere..I became eligible for Social Security, and had a small annuity from my late husband’s federal government plan. That is all the income I have….
So since my situation has changed, I have nothing left at the end of the month after paying InCharge and a Bank of America credit card account and an American Express account that were not included in the original deal with In Charge. InCharge says that if I stop our agreement, I may be liable for past interest and late payment fees…..I have paid everything down to less than half of what the original debts were….if I just stopped all of the payments that now come automatically from my checking account, what will happen? What is the best way to handle all this and still manage to be able to buy groceries and pay rent?? Thank you for any help you can give, your articles have been very comforting and insightful.
Dianne”
Dear Dianne,
Well unfortunately you’ve just discovered two critical flaws in any debt management program. It only discharges your debt when you make all five years of payments and the plan is not designed based on what you can afford, but what the creditors want.
You did not mention the amount of debt that you have but on some level, that’s really not the most important issue. What is the most important is where do we go from here.
It seems you’ve already talked to InCharge Debt Solutions and they said your creditors may retroactively punish you if you stop making payments.
In reality what will happen is those creditors that were included may either extend to you their own internal hardship programs or jack your rates back up and once you fall behind in payments you’ll wind up in collections, it will hurt your credit and you may be sued.
What I do know for certain is that if you are struggling or can’t afford to make the monthly payment then it is only a matter of time before your InCharge debt management plan fails.
You can use the free How to Get Out of Debt Calculator to review your options.
Considering the fact you are still unemployed and your income is not expected to rise it makes logical sense to pay close attention to the legal solution that will give you a fresh start. That second chance solution is bankruptcy. With a consumer bankruptcy you can close the door on your debt quickly, and in a year or so have your credit rebuilt again following this guide.
InCharge Debt Solutions provides the required pre-bankruptcy counseling. Maybe since you’ve been client for so long they can provide it to you for free. At the very least, ask them for a fee waiver if you decide to pursue that route.
You can click here to find a local bankruptcy attorney you can talk to for free and find out of bankruptcy is right for you. You may also want to read, How to Get Out of Debt. The Honest and Unvarnished Truth.
Please post your responses and follow-up messages to me on this in the comments section below.
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.
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