I’m considering a Clearpoint DMP for credit card debt totaling $25,000. How can they do what I apparently cannot, have my creditors change interest calculations from compound to simple to fully amortize ‘the loan’ in 4 – 5 yrs? Why can I not do the same myself thus saving $40/mo. in client fees, approx. $2200 over the same term.
Is there an agency that can provide the same service(if I can’t myself) with lower fees?
I’m also assuming that Clearpoint will faithfully pay my creditors (assuming I make my payment as scheduled to them), Should I be concerned?
Clearpoint, and other credit counseling programs pass on the debt management plan terms the creditors extend. They do not negotiate or change the interest calculation.
The interest rate you are charged while enrolled in a credit counseling program may be reduced or in some limited situations, eliminated.
The loan is not fully amortized over a 4-5 year period. The creditors adjust the payment terms in hopes of your debt being eliminated in that time period but there is no guarantee that it will be.
A creditor could always sell your account to another owner and the terms may change. You might also find yourself facing a situation sometime in the next five years that prevents you from affording to finish the program. In that case you interest rates may jump up and fees and penalties may be added back.
I would not have any worries that Clearpoint would make timely payments to your creditors when you make your payment to them. They are a mainstream credit counseling agency.
If you want to see what other options you might have so you can make a fully informed decision then you may want to first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
Then use the free How to Get Out of Debt Calculator to review your options.
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