Debt management plans affect your credit ?

[debtadvisoryonline]

Hello All Member,

Debt management plans affect your credit ?

Using a debt-management plan to pay off debt won't hurt your credit score, but it may make it difficult to qualify for new credit.

Please share your opinion here ........

I was ripped off by one firm--they took my money and never paid any creditors.

[jjones8601]

What state do you reside in please?

Most states allow creditors to provide negative information to be reported to all three (3) major credit reporting agencies. When someone “consolidates debt”, it is almost identical to filing for bankruptcy. It shows up on your credit report as a debt consolidation. This will affect and lower your credit score.

I am sure you will have replies from people who have taken this course of action. I know some myself in Texas...

[debtadvisoryonline]

Originally Posted by jjones8601 What state do you reside in please? Most states allow creditors to provide negative information to be reported to all three (3) major credit reporting agencies. When someone “consolidates debt”, it is almost identical to filing for bankruptcy. It shows up on your credit report as a debt consolidation. This will affect and lower your credit score. I am sure you will have replies from people who have taken this course of action. I know some myself in Texas...

When someone “consolidates debt”, it is almost identical to filing for bankruptcy.
yeah I think you are right !!!!

[jjones8601]

Allow me to clarify…

A “debt consolidation” should be construed as someone taking out a loan (cash-out refinance or HELOC “Home Equity Line of Credit”) and paying off debt and consolidating that debt into one new payment.

The companies like CCCS (Consumer Credit Counseling Service) basically do what you can do yourself. They contact all of your creditors and try to negotiate lesser payments and reductions in interest rates and or the APR.

Here are the reasons this does affect your credit:
1) Just because the bank or line of credit holder may accept these lesser payments they have the ability (and usually do) to continue to report 30-days late each month if the minimum payment is not met.
2) The bank or line of credit holder may also choose to add comments when they report to the credit bureaus. They add comments like, “The creditor has settled for less than the full balance".

Unfortunately, with these listed on your credit report, it will lower your score. If you are a homeowner, I suggest trying to refinance your loan and getting a cash-out or HELOC as mentioned above in the debt consolidation section. The rates are starting to raise so hurry.

***Note***
In Texas, if you borrow (it’s either) $80,000 or $100,000 cash out from your homestead, you will no longer have the ability to write of your mortgage interest when filing your federal tax return.

[expertcredit09]

Using debt-management to help you pay off debt will not negatively affect your credit score. But it might make it a little harder to qualify for new credit. Usually, a comment is added to your credit report that you are using an agency to help you pay off your account. This will remain until your account is paid in full.

Credit counseling information is ignored with it comes to your credit score. After all, you are continuing to pay your bills on time. But the comment might hurt you a bit.

[albertknowles09]

Yes same it with me I expect more information on Debt management plans affect your credit ?