Is There a Debt Management Program For Folks Who Are Not Currently Behind? – John

“Dear Steve,

Between medical bills, my son’s college tuition, and just plain being stupid, my credit card debt has just gotten out of control. I’m not having any problem making minimum payments right now, but I see that changing in the coming months.

We bought a house last September and as soon as the mortgage began reporting, the credit card companies started ratejacking us, causing the minimum payments to go up, dramatically in some cases. My credit card debt is around $60K.

Is there a debt management program for folks who are not currently behind?


Dear John,

I think the jacking up of your rates is just coincidental with the time that you moved. Many people had their rates moved way up around then.

The short answer to your question is that there is no help available for people that are current on their bills. As long as you are current, that’s where creditors want you to be. And as long as you are making the minimum payments, the creditors get to maximize their profit off of you while feeling confident that you are not going to default.

As long as you are current and want to protect your credit rating the best way to eliminate your debt is probably with a cash out mortgage refinance. Sure, there is a big drawback with this approach, it shifts the debt from unsecured to secured against the house. If you could not pay your new mortgage payment you could lose your home.

You are in the situation that many face. Some exercise drastic solutions like going bankrupt from being current on their bills. This is often called the surprise bankruptcy.

You could enroll in a debt management plan to get lower interest rates but it will show up on your credit and your cards will be closed. That will lower your credit score and leave a big bruise on your credit report. I’m not sure you want to do that.

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If you don’t want to leap at any of those more dramatic options, the remaining logical choices would be to look for a better rate balance transfer offer. They do still exist. Or you could just attack you your debt using the debt snowball approach to get out of debt faster.

Oh, and if you decide to go the balance transfer option, I would advise you to get a copy of your consolidated credit report, the link is for the same one I use. If you get the report with the credit score option, a quick look at your consolidated credit report will show you what, if anything is lowering your credit score and what can be done to improve it. You could then address that issue to get your credit score and credit report looking as good as possible before you apply so you can get the best deals available.


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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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