My husband’s income has dropped by about 60%. We’re having a difficult time making ends meet. We have a forebearance plan right now with our mortgage lender. We have about $35,000 in credit card and medical bill debt. We’ve fallen behind on most of our cards by over 30 days and they have increased our interest rate to near 29%. We’ve consulted with Money Management International on this and they are able to bring the monthly payments down by a few hundred dollars, saving us alot of interest and getting everything paid off in 4 years.
I suppose that Money Management International is as reputable as any other CCCS office that is part of NFCC. Money Management International is a debt management organization which assists consumers with repaying their debt through a standard debt management plan.
But I suppose the thing that worries me most is that your mortgage is in a forbearance, you’re finding it difficult to get by and thinking of entering a debt management plan. Entering a debt management plan is not going to address the underlying issue here of the loss of income. A forbearance is typically a payment holiday and at some point that will be up for you. You will then have to start paying your mortgage payment and the CCCS payment and hope that your husbands salary has increased by then.
I think what we need to focus on most at this time is if you are able to pay your normal living expenses plus your normal mortgage payment. If you are unable to do that then I’m just worried if entering a debt management plan, with anyone, at this time is a right move for you.
The debt management plan can be a good tool to allow you to repay your debts but you have to remember that the debt management plan is calculated based upon what creditors want rather than what you can afford. Your number one priority is when you are in debt are to make sure that you can properly paid for the essentials; health insurance, mortgage payments, car payments, and other secured and needed bills, like utilities.
If you can afford to pay those essential bills and you have money remaining then that money can be used to enter a debt management plan. But my opinion is that you should also use some of that money to save each month. Allocating all remaining money towards a debt management plan without saving leaves you still in an unsafe position each month.
So in summary I think you should take care of the mortgage situation first. Pay a mortgage payment that your bank and you agree to. And then see if you have enough money left over to enter a debt management plan. If you don’t have enough money left over then you need to look at other solutions, like bankruptcy even.
It does not make any sense to enter debt management plan where you have no reasonable expectation to be able to repay all that you owe over a four or five year period. If you do enter a plan that does not meet your over all goal, then the plan will fail in a few months, next year or a couple years and you will spend all that money but not gotten out of debt.
Does that make sense? Let me know what you decide to do.