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InCharge Credit Counseling and ClearPoint Can’t Lower My Payment Much. – La Nesha

“Dear Steve,

I am a single Mother living on a income of $30000 a year. I have almost $40000 in credit card debt. I am currently paying $925 a month in rent and making the minimum monthly payments on each card/loan. What do you think I should do? I have contacted InCharge Credit Counseling and ClearPoint Debt Management and I just couldn’t see the difference in paying $ 87 a month versus paying the $92 dollars a month I am currently paying to each creditor. There was only a $ 5 difference. Could you please give any suggestions?

La Nesha”

Dear La Nesha,

Both InCharge Credit Counseling and ClearPoint are mainstream credit counseling programs. When it comes to administering a debt management plan I would not have any reservations they would do a fine job.

But you’ve discovered two weaknesses in credit counseling in general:

  1. The reason the payments by both companies are so similar is because the payments are determined by the creditor and not the credit counseling organization. It’s a very backwards approach that all credit counseling groups suffer under. Rather than calculate a payment that is reasonable and based on your affordability they tell you what the creditors want.
  2. A big advantage of a credit counseling program is that interest rates may be significantly lowered. But that’s a hollow reward for anyone struggling to make ends meet. If the interest is reduced but the payment remains the same then those struggling to make the minimum payment are doomed to fail.

From what you’ve share it seems clear that you need a larger reduction in your monthly payment and you don’t have a large sum of money on hand to settle your debt. It also seems very clear that for whatever reason you’ve had to use credit cards to help get you through.

It seems the most logical solution to investigate is going to be a second chance and fresh start through a chapter 7 bankruptcy. In that approach your debt would be completely eliminated in about three months. I urge you to meet with a local bankruptcy attorney and review what bankruptcy would mean for you. You can click here to find a local bankruptcy attorney.

But remember, you will not have the credit cards to fall back on. But this is probably the best approach to actually allow you to live within your income. Additionally I think you should see what public benefits you may be eligible for, if any, by using my public benefits finder.

Please post your responses and follow-up messages to me on this in the comments section below.

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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.

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