Experiences Using a Non-Profit Debt Management Program

Calling a debt management program (DMP) was a low-point in my life. Newly divorced with more than $15,000 in credit card debt, I didn't trust anyone - not my ex-husband, not my credit card companies (who had come after me ruthlessly despite my very decent credit history), not my divorce attorney, not myself. I certainly didn't trust that the automated phone system at a debt management program called Consumer Credit Counseling Services (CCCS) would help me get out of this terrible financial situation.

But I had to try something! My creditors' calls wouldn't stop. The operators, I could tell, were getting ever more professional sounding, higher and higher up in collections at the banks I was dealing with. I had to find a way to restore order to my life - even if it was going to be a new order that I wasn't happy about having to live with.

Consumer Credit Counseling set up an appointment for me with one of their representatives, and I arrived at their satellite office near my home to find a friendly, polite, young man named Gerald waiting to discuss my findings with me. He was sympathetic. He listened as I described my situation. He said to me, "You can do this. You can get out of debt." He added something comforting like, "It happens to the best of us."

He explained to me the terms of "joining" CCCS: I had to divulge all my debts to them as well as tell them about my income and monthly expenses. Based on that information, they would negotiate with my creditors for lower interest rates and lower monthly payments. They would encourage my creditors to stop harassing me. Usually, Gerald said, it worked. I would stop getting harassing phone calls from creditors. This was the good part.

There were more terms, however. I would have to pay CCCS an initial fee, which I think was around $50. After that, I would have to pay them $24 a month for as long as I was on the program. They would need my checking account number because they would automatically withdraw my monthly payment (in my case it was $360 per month), then they would distribute it out to my creditors. Late payments or insufficient funds could mean getting dropped from the program.

And, perhaps most significantly, as long as I was on CCCS's program, I could not have a credit card or apply for a line of credit. Car loans were an exception.

I was hesitant to sign on. After all, I told myself, I didn't have a credit card problem - that problem had belonged to my ex-husband. My problem wasn't overspending, it was trusting the wrong man. The thing was, though, I was the primary card holder on our accounts, and I was therefore held legally responsible for the debt. I was the one who faced harassing phone calls daily. I was the one who, frankly, cared. I didn't want to go forward in life with a terrible credit record and debt up to my eyeballs. So, umm... I did have a credit card problem no matter what the source. And, I wanted my creditors' calls to finally, finally, stop.

I signed on.




With the help of the debt management program, Bank of America agreed to reduce an interest payment on a very high balance from 23% to 8%. HSBC reduced the interest on a card I had with them from 12% to 0%. And, Cox Communications, a cable/ phone company with whom I had an outstanding balance of $550, agreed to accept a monthly payment of just $20 as long as it came through the Debt Management Program. I had tried negotiating with all these creditors myself with no luck - the DMP did so easily and the harassing phone calls stopped.

I made my monthly payments. I never missed one, even though it was really hard sometimes. I lived without the convenience of a credit card for more than two years. While I was on the program, I also strove to make extra payments to my largest credit card balance (Bank of America), using the debt management program to keep me in good standing and generally on track, but exceeding their expectations by paying down the big debt.

(Gerald, by the way, told me I shouldn't have paid the extra money to the credit card balance, but used it to start a savings/ emergency fund - was this good advice or did he just want me to keep paying CCCS $20 a month? I'm not sure. I will say that every single person who I ever spoke to at CCCS, by phone or in person, treated me with kindness, compassion, and respect. I never heard a derogatory word or had the horrible experience of calling during business hours and being unable to reach a real person. Overall, I'm thankful to the company for their support.)

Finally, I was able to pay off almost all of the debt and a family member lent me the last few thousand so that I could go off the debt management program. I wanted to rejoin the world of credit - and reestablish myself as a good credit holder. I expected credit card offers to come pouring in to me. They haven't. I'm not sure if it's because I was on a debt management program or if it is because in the current economy banks simply aren't extending credit to new/ risky customers. I did finally procure a credit card, but it has a limit of just $500 and an annual fee of $39. (So... six months off the program and I'm $39 back in credit card debt, already... without even making a purchase.)

If you are considering a debt management program (DMP), here are some points to consider:

• It should be a not-for-profit organization and the monthly fee should not be above $40.


• You should be able to make extra payments to your credit card accounts at your convenience without going through the DMP.


• You should be able to go off the program at any time you choose, with no penalty from the DMP itself. (Your credit card companies may punish you - for example, when I went off the DMP, my one card with a remaining balance went from a 0% interest rate - negotiated by the DMP - to an interest rate above 30%.)


• You should be treated respectfully every time you call to speak to a representative at the DMP.


• They can only help you as much as you are willing to commit to helping yourself.

The Federal Trade Commission has also posted information for consumers about using Debt Management Programs effectively and about how to know if the program is legitimate. Link to that information here.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

After 9/11 Creditors Told Me, "There's Nothing We Can Do"

My husband worked on the 81^st floor of Tower One in the World Trade Center for a company called Network Plus. On September 11^th his entire office managed to climb down all 81 flights of stairs and escape just minutes before the buildings started to collapse. His boss guided the entire team of salespeople down and encouraged my husband to continue when he felt tired. At one point my husband’s boss even left the team in order to help carry a woman in a wheelchair down the stairs to safety. Miraculously, she survived as did everyone in my husband’s company. As the highest office to have every member survive, Oprah Winfrey even had them appear on her show.

The ordeal was stressful enough for us to deal with, and after a few weeks passed the company he worked for went out of business. They tried to survive by relocating but the entire city was in such turmoil that the company simply couldn’t make it work. I realized that my husband was the bread winner and I had no idea how we were going to pay for our bills. We had managed to accrue quite a lot of credit card debt and now had only my small teacher’s salary to pay for it all. As the bills continued to pile up I started to make phone calls to the credit card companies with the hopes of working out a payment plan. What ended up happening instead was my filing for Chapter 7 bankruptcy.

Before September 11^th I had a credit score of about 650 and had over $10,000 in credit card debt. My payments were always on time and I rarely had any problems. Most of my debt was due to department store credit cards such as Macy’s, Ikea, Express and Spiegel. I also had an electric bill that I couldn’t pay and a cell phone bill which piled up. The interest rates were sky high, over twenty percent for each card and I knew if I didn’t work something out I was going to sink fast. Paired with the late fees I knew it would happen quickly if I didn’t do something fast. The largest amount I owed was to American Express and since they require payment within thirty days they were the first company I called.

To say that American Express is cold-hearted would be a nice way of describing them. I explained to the representatives over numerous phone calls that I wasn’t looking to get out of paying the $2,000 I owed them but that I needed more time than the thirty days. They could care less. They didn’t even sound sympathetic when I spoke to them nor did they seem to care about my situation. As if programmed like a robot, each representative I spoke with said the same thing to me, “there’s nothing we can do”. They would take nothing less than the full amount owed and as long as I didn’t pay it the late fees would continue. The late fees started to add up into the hundreds as November rolled around.

The other department stores sometimes sounded sympathetic when I told them about my situation but could do little to nothing to help me. The representative I spoke to at Spiegel was distraught to hear about my situation and immediately put her manager on the phone. He explained that there was little he could for me except to lower my interest rate from a 22% to a 12%. He waived one late fee for me but gave me no extension.

I found that no one really wanted to do me any favors at all. I explained to each one that I simply needed a two month period during which no late fees or other charges would be given to me. Even when I explained that I would be forced to file for bankruptcy they still gave me the same line – “there’s nothing we can do”.

The only company that helped me out was the bank that issued my student loans. Citibank immediately issued me forbearance for my student loans and gave me no problems whatsoever. They were nice and understanding and were actually the only company that did anything to help me during the difficult time.

My credit score began to plummet as did my credit history. After I filed for bankruptcy in December my score dropped to the low 500’s and stayed there for years. I couldn’t rent an apartment and I had a hard time getting utilities without paying a deposit. The funny thing was that my husband found a new job within months and our income was back where it was before, but none of that mattered when companies looked at my credit report.

Today my credit is back up to a 620 but is still marked with the bankruptcy. If the credit card companies had taken the time to work with me they would’ve had their money and I would’ve kept a clean credit report.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

The End of an Affair

Most people love money. So many people today choose to buy expensive material things and validate themselves by these purchases. Money helps people feel important, to take control, to make a statement about who they are. Money becomes a best friend, a family member, and a lover. Obtaining money is all some people can think about and all that they believe in. It doesn’t matter how they get it or who they hurt in the process, as long as in the end they get the money they need to feed their addiction.

Some people don't have the means to gain the money they desire but this doesn't stop them from having irresponsible flings with it. Even though these people may be late on their bills, they will go out and buy something they can't afford just to make themselves feel better. And it will usually work. During the heat of the moment people who make an impulsive purchase will feel like they are at the peak of their happiness. And when the feeling disappears they'll likely feel guilty, ashamed and regretful. Not much different than a one night stand.

Like all love affairs, my own love affair with money was short, sweet and tumultuous. It was both satisfying and completely unsatisfying at the same time. And similar to many love affairs, mine began at work. My job as a sales representative on Wall Street in New York City started up a love for money that would only go away after it ran its course. It became a love-hate relationship in which I began to spiral out of control.

Making a ton of money as a person who wasn’t even good at her job seemed like everything I ever wanted. I was renting an apartment in a top building and I was able to buy anything I wanted. I shopped in boutiques, purchased the newest cell phones the day they hit the market and treated people to dinners and drinks. What I didn’t realize at the time was that I was building my life around money and money was the thing that was in control.

After I lost my job the love affair became quite rocky. I no longer had the sparkle of admiration I once felt towards money since it was now seeing less and less of me. I moved out of my elevator building apartment into someone’s rental in their house. I went from having a washer, dryer, dishwasher, microwave and air conditioner to having none of these. The quiet of the building I had lived in was replaced by screaming landlords who constantly argued with each other. Instead of shopping at boutiques I started shopping at Old Navy and other discount clothing stores. Eating out and partying all the time was replaced with staying home and cooking dinner.

Some people in my situation would have never given in to the evil tricks that money played on them. These types of people would have picked themselves up, got a new high paying job and started up their love affair again. They would believe that they were back in control, but of course this would just be another trick money would play on them. The second time around would likely be more passionate than the first, and it would become a lifelong addiction that created life for those who chose it. People that would never dream of a real life affair find themselves embroiled in controversy and secret desires.

But love affairs rarely end up so happy in the end. If they do, it takes a lot of pain and struggle to get to the end goal and a lot of people get hurt in the process. I chose to end my love affair with money by replacing it with something real, a true love that was not based on sneaky escapades and under-the-cover operations. As you look back on the choices you’ve made thus far in your life, ask yourself, are you in the midst of an affair?

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

What A Little Effort Can Do For Debt Reduction

There are many, many things I love about my life here in the beautiful mesas of the Chihuahuan Desert. Among those are the contrasts, the juxtapositioning of old and new ways of living.

While I make use of the remarkable technologies of today as I write this now, I spent some time this morning as the indigenous women of this region did for thousands of years -- making tortillas. And, while I was working, I was thinking about a couple things related to cooking at home -- far less expensive and far more healthy overall.

I could buy tortillas. They run about a dollar a
dozen. In the photos (always clickable for a larger view), I am mixing up a batch of about 40 for less than a dollar... and, if I do say so myself, my home-made, fresh tortillas are far better than those mass produced in the factory and bagged up. Everyone here has said so, too.

In the big pot next to my wanna-be comal -- I have no proper comal for tortilla making, so I make do with a well-seasoned iron skillet -- are about 5 pounds of pinto beans. I'm feeding 9
people with hearty appetites. I'll be smashing and
frying a good portion of those beans with some
spices for tacos tonight, which is why I made
tortillas this morning. The rest of the beans will be used tomorrow by my sister to make her awesome chili.

The dried beans are pretty inexpensive, about 2 dollars for 4 pounds. Canned beans are easily double and often triple the price. It seems kind of silly to pay that when cooking dry beans is so easy. If I wanted to, I could buy canned refried beans for my tacos, though that would also be much more expensive, and I'd still have to add spices to make them palatable. Furthermore, they'd be less nutritious from the can, and probably have MSG and be high in sodium.

My point, over all, is that many people spend a lot of money on prepared foods, convenience foods, and drive-through foods, when by investing a little effort they could save a considerable amount on their food bill by cooking at home. Furthermore, most of those quick foods are price heavy and nutrition light. The benefits of eating fresh, whole foods are innumerable, but if we stick to the financial aspect for a moment, improved health leads to less money spent on costly health care.

There are many things in day-to-day life that are similar. For those looking to reduce debt and decrease spending (leaving more money for saving or more time for something other than working to pay the bills), learning to do basic repair tasks around the home and on the auto really isn't all that difficult. Being less dependent on others to meet your needs is a very good thing, particularly in today's economic climate.

I've been following the recent news about food shortages, skyrocketing prices, and the rationing of some food items throughout the world with a blend of fascination and horror. This is exactly the scenario that inspired me to remove my family from the city. I, geek that I am, have strange hobbies. Global economics is one of those hobbies and I've been watching trends for a few years now. To me, as well as to many financial experts, it looks like times are sure to be fiscally challenging in the near future and for a significant period of time thereafter. The financial markets are going to have to go through their spasms of correction and we're all going to have to go along for the ride.

During the Great Depression, while those in rural areas did experience severe poverty, they did have a significant advantage over those living in urban areas -- the ability to grow and hunt for their food. During World War II, the Victory Garden was an important supplement to households throughout the nation, including urban neighborhoods, as common, daily-use foods were rationed by the government. Looking at our situation today, it seems that learning to develop a bit of food self-sufficiency -- whether by cooking more, creating urban patio or fire escape gardens in containers, or larger suburban or rural gardens --is not just good economics in terms of a debt reduction plan or strategy for reducing overall expenses, but also simply good old-fashioned common sense.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

Out Of The Blue...

We've had the equipment for weeks. What we didn't have was an installer. The company couldn't seem to locate one willing to come to our remote high desert location. Naturally, they made no mention of that potential difficulty when they took the order.

So, we held the equipment through installation cancellation after installation cancellation. We just had our appointment for April 30th recently canceled, as the closest installer had to drive 800 miles and had yet to schedule other installs in the area.

And, then, out of the blue, this past Saturday, installers arrived with no notice. After, of course, I'd contacted another satellite company because this one couldn't seem to get the job done. Naturally, their website is just as good as their customer service and I cannot get into my account and will have to go somewhere to call them, as there is no way to e-mail their support system. That doesn't surprise me, ha ha ha.

All that, though, seems fairly small in comparison to this great leap forward for us here in the desert. I can now work from home again. The past few weeks of me having to go out to work have been very stressful for the children. I've always been at home with them. With everybody -- my sister and my brother -- having daily access to the Internet, everybody can get back to work and we can start moving forward with a variety of essential projects, like solar panels to run the modem so we don't have to use the gas powered generator as much.

With all that is in the news today -- food shortages and rapidly increasing prices, oil prices skyrocketing, the dollar continuing its fall, an epidemic of struggling mortgagees, a tidal wave of foreclosures, and the potentials that lie underneath the staggering burden of consumer debt -- our efforts towards sustainability and self-sufficiency seem quite timely and more important than ever.

The path for some of our nation's banking and lending institutions seems inevitably to lead to failure. Already sustaining significant losses from the sub-prime mortgage and lending debacle, many of these institutions are now having to deal with consumer debt gone bad. Economically stressed consumers have been missing payments as they struggle to make their salaries extend to cover the most basic of needs as the costs of those needs move steadily upwards.

That oft repeated Chinese curse -- not the one referring to flooding the market with cheap consumer goods, but the one that says may you live in interesting times -- appears to be an apt description of our current situation. Very interesting times, indeed. To me, everything going on today indicates an imperative need for preparation -- reduce debt, increase savings, and stock the shelves.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

It's A Long Road...

Now that we have this 46 acres of land, it's a long road to getting everything set up and running smooth. There is so much to do, from devising and setting up alternative energy systems to making adobe bricks to dealing with the utility companies that we do plan to do business with.

The dirt road you see -- that's the road we live on. We see another vehicle go by once every two or three weeks. When we came here, it was a nameless and dusty easement used by various property owners in the area to access their land.

That nameless dirt road is a good part of why I have set up a temporary office in my neighbor's home-in-progress. In order to get telephone and Internet service, mail, UPS deliveries, and just about anything else, we had to get our dirt road a name. On the surface it was a simple process, but in reality, it was long and slow. After weeks of waiting, it was through the intervention of a local that we finally were able to get a name and number. However, that is just the start of the effort to get phone and Internet (the only utilities we are going to get out here, as we're going with alternative energy sources for electricity).

There is a waiting list for everything. We recently learned that we won't have a landline -- thus no DSL -- until much longer than the 3 MONTH waiting period we were initially informed of. August 28 is now said to be the big day. And, although the satellite company sent our equipment a long time ago, we still don't have an install date. Never mind that they told us two weeks....

So, it looks like I'll be toting my computer stuff and generator over to my neighbor's to work for quite a while... Fortunately, it's so beautiful here in the high desert lands on the border -- I walk out of my currently humble abode and see clearly into our neighboring nation -- that these delays and hassles feel like small details in the grand scheme of things.

While things seem to move slowly in my part of the world, that doesn't seem to be the case in the rest of the world. Now that the psychological barrier of the $100 mark has been breached, the price of oil has been shooting up even faster. Last Friday, according to MarketWatch.com, the price per barrel touched $117. Food prices have also been moving up, some quicker than others. Rice has gone up astonishingly on the world market, causing major exporters to ban exports, as they fear that they will not be able to feed their own citizens. Some nations have even started to ban the export of wheat. News headlines from all over the world are full of the food crisis and riots in areas where rising prices are leaving the poor hungry.

Looking at all that is going on -- how quickly things are seeming to deteriorate in the global economy, the biggest names in the financial industries teetering on the brink of fiscal disaster, the rising cost of living -- it seems to me that this point in time is one in which all of us should be thinking seriously about debt reduction. The less debt we carry into the uncertain economic times that seem fairly sure to be a part of our future for a while to come the better.

And, on that note, I read a really interesting article on the Motley Fool the other day. It described how 0 percent balance transfer credit card offers can -- with discipline and commitment to a goal of debt reduction -- be a valuable tool in getting control of and eliminating credit card debt.

Many people use such offers unwisely and end up with a much greater debt burden or simply move debt around without ever really dealing with it. However, the smart consumer can really make out with such offers, using them as a means to really knock down the principal of their debt. Things out there in the economic world don't look like they are going to get better any time soon, making now a great time to act to reduce your debt. A glance to the left offers some great resources for 0 percent balance transfer credit card offers. Apply today and you may soon be able to put this debt reduction tool to work for you.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--

Have I Got A Debt Reduction Plan For You!

This is the view that I enjoy during dinner today. (photo credit, David Secor) Click it if you'd like to see the full-sized version.

It's a big change from just a few months ago, where the dinner hour conversation was interrupted by deep bass thumping out of the speakers of passing cars and by the loud hip hop and reggae music streaming from the cars waiting outside of the local drug selling spots.

I no longer step out my door onto a sidewalk littered with wrappers and trash left by careless people passing by when leaving local businesses, legitimate and illegitimate. Instead, I am greeted by wide-open sky and an almost mystical natural beauty.

The children have more freedom than they've ever experienced. When they lived in the city, they weren't allowed to play out front without adult supervision. It was not safe. After a couple of exchanges of gunfire between neighborhood drug dealers, it was no longer safe to allow them to play in the backyard without supervision. Today, they run, they play, they explore. They see the night sky and countless stars, they see wildlife. They are learning so much and are having a wonderful time.

And, best of all, I've significantly reduced my debt burden and, as time goes on, will continue to lessen the amount of cash I need to spend on daily living -- certainly a good thing with all the turbulence and trouble in the realm of economics. Not only is the United States struggling, but the world as well. Major exporting nations banning the export of rice and of wheat, oil prices skyrocketing, food costs rising, the dollar dropping in value... the list goes on and on. Clearly, it is a good time to consider debt reduction, with a goal of debt elimination, and the building of a more sustainable lifestyle.

Oddly enough, reducing my debt burden began with taking on more debt -- $20,000, to be exact. However, this debt is productive debt, very productive indeed. The concept of productive debt versus consumptive debt is a bit of an old-school notion. Though, I suspect that, as these easy credit, no money down, buy now pay later, no doc loans days come to an end, that old-fashioned, old-school notion will soon be back in style, at least among the smart set.

So, what did I get for my $20,000 no credit check, easy terms debt? The one that I pay back at a rate of $360 per month? The one that, if I pay the principal all off within the year, becomes significantly less, as the interest charges that bring it up to $20,000 will be waived? (And, I will!) I got 46 acres of land, in a warm and sunny climate perfect for relying on solar power, in a region with winds that make wind power an attractive alternative to more traditional energy sources. I got space for food growing and home building. I got a lifestyle that -- immediately upon my arrival, before anything was set up at all -- dramatically reduced my living expenses.

In NY, the last heating bill I paid for my apartment in the two-family house I shared with my sister was just over $600 and that was for the month of December. I have no heating bill here, but I do have a lovely tan. The monthly land payment is less than the amount I gave my sister monthly for my half of the mortgage on the house. (We got rid of that when we came here.) Those are just a couple of the quick and easy ways that I've experienced a reduction in my living expenses.

In the weeks to come, you can expect to read more about my adventures in working towards a debt-free and richly economical lifestyle. I look forward to sharing the details of my personal debt reduction plan and my progress in making it happen. I hope that some of my experiences are useful to you, helpful in your efforts to achieve your own debt and lifestyle goals.

--> www.FedPrimeRate.com Privacy Policy <-- --> SITEMAP <--