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Debt management problem


mikeg
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Hoping someone can help me. I have a situation where I was drowning in credit card debt back in 2002 when i was in college. At the time I made the mistake of going through a debt management company to lower my interest, minimums, etc. not knowing that I could have done all of this myself. Funny that as I talk to them today they tell me that having this on my report is like having a BK, but they didn't tell me at the time!

Fast forward to today. My credit took an obvious hit when I entered this program and I am trying to improve my scores. I have made every payment to this place on time for the past 4 years, but the credit reports say "managed by debt management program". I want to get out of the program to get these marks off my report, but I am trying to weigh whether it is worth it or not. I still owe $4K on the three cards. The credit card companies (2 with Chase and 1 with AT&T Universal) can't give me a definite rate increase, but I have been told to expect it to go to the default rate of 32%!!!

I'd be looking at about $75 more in interest per month to start if this were to happen (I am at 10-11% through the DMP).

Will doing this improve my scores at all? And will getting these marks off my report help me to get additional credit to possibly transfer these balances out of these rediculous rates.

Any advice is greatly appreciated!

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Ugh. This is hard one. I encourage you to read, read and then read some more before you make any decisions. There are no guarantees. And sometimes, we make concessions in one area (credit score) to gain benefits in another (reduced interest rates).

It is often easier to have the negative comments removed AFTER your creditors have been paid off. Some do this automatically, some never do. Your score and outlook will improve once those comments are gone.

Having them totally removed is definitely the goal. DMP or Consumer Credit Counseling is seen by potential lenders as worse than BK. It is absolute indication that you needed professional assistance to manage your debt, thus making you a huge risk. Good luck!

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Does anyone know if these comments come off, whether there is an immediate score jump? I want to start rebuilding my credit and was lucky enough to keep one card, but lenders will not touch me with those comments on my report.

Also, once I am off the DMP, those comments have to come off, but has anyone had trouble getting the comments removed? Just trying to get as much advice as possible before I take a huge interest rate hit with little or no score gain or more positive outlook when it comes to potential lenders.

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I am very far from an expert in credit, and this is nothing more than my own personal opinion. Please take it with a grain of salt.

It seems that the opinions that have been repeated on these forums which make the most scene to me is to always choose the option that is best for you financially at that moment, even if there is a transitory negative impact on your FICO. Of course, there may be situations where the short term impact is important such as when mortgage shopping, but barring a special need for credit, making the best financial decisions will always place you in a better financial position which in the long run can do nothing but help you and your credit.

I don’t know what your credit needs are. Although this is not a direct answer to you question, perhaps it is food for thought. If you need more credit, then you got to do what you got to do. But if you don’t, there are a lot worse things then sitting at 10% interest on an unsecured debt. That $75 a month translates into $900 toward your principal annually.

I am interested in what it takes too remove debt management comments from your credit report. Hopefully someone will give a definitive answer.

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