Is a “Debt Management Plan” really nothing that a consumer can’t do on their own?

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To explain: I have three credit cards with moderately high balances but extraordinarily high interest rates. On several occasions in the past, I have contacted the credit card companies and tried to get them to lower my interest rates, but they have always – ALWAYS – refused. Their explanation is always that 1) I have been late on payments in the past (and by late, I mean one day or maybe two at most) so they can’t do anything for me, 2) I’m considered a high risk (my FICO score is in the 600’s) and 3) Due to “recent changes in credit card legislation,” the industry is not lowering interest rates and are in fact raising them. I don’t have any leverage to use against the credit card companies to try and strong-arm them, either.

Yet just this past week I talked to a Credit Counseling Firm who recommended I enroll in a debt management plan to get my CC debt under control, and this firm is able to get my interest rates reduced to far less than half of what my credit card companies were charging me.

Obivously, the debt management firm has tactics and advantages that I myself do not when it comes to dealing with the creditors, so this is NOT something I could have achieved on my own. Yet people continue to state that these firms don’t do anything that a consumer can’t do on his own.

What gives?
***I think I either need to clarify a bit, or people just aren’t reading the complete text of my question.

What I’m asking is, how is it possible that a credit counseling company could get my credit card companies to drop my interest rates AND accept smaller payments each month….when I myself have TRIED on my own repeatedly to get my credit card companies to do the same thing – but they will NOT do it for me?
That’s what I’m trying to understand. What is the credit counseling company doing that I’m not?

  1. Reply
    Cat Lvr
    July 17, 2011 at 7:32 pm

    It’s nothing you can’t do on your own. You can call the CC yourself and get your interest rate reduced. Demand to talk to a MANAGER and let them know you are having a tough time paying because of the INTEREST and you don’t want to have to choose who to pay between all your creditors.

    Then just pay the minimums to all your creditors and pay any excess money to the creditor with the highest interest.

    If, after all this, you are still floundering and can’t seem to pay down the cards – you may need to consider bankruptcy.

  2. Reply
    July 17, 2011 at 8:28 pm

    You are correct that most debt consolidation or repair strategies can be done by the individual.

    However, very few – if any – have the personal discipline and determination to be able to stay the course. Most people readily slip back into the conspicuous consumption routine once they start making headway on their debt – pitching them into another, deeper financial pit.

    That is really the reason why such plans have to exist – to help those without the strength to help themselves.

  3. Reply
    I AM paradox
    July 17, 2011 at 8:45 pm

    you gave up too soon.
    i had 3 credit cards totaling £15k.
    after loosing my job i couldn’t pay them so i contacted each company and requested they freeze the interest completely and work out a payment plan.
    hsbc flat out refused several times but i did not give up.they eventually invited me to make a repayment offer which was a lot less then what i owed.

    rbs were much more helpful (because of the gov bailout) they agreed to freeze the interest and accepted a token repayment of £1 per month.

    you should really get independent advice rather then these debt companies as they are there to make money and will just increase your debt.

    additional – they are not doing anything different. the cc companies are well aware that most people are ignorant to their own rules and WILL flat out lie to you.
    every time you speak to these people note their name and to someone as high up as possible.
    with the likes of HSBC you will just end up talking to a call center operator in india,these people do not have the ability to help.
    look up all the phone numbers online and make sure you are talking to someone with the ability to help.

  4. Reply
    July 17, 2011 at 9:02 pm

    I agree with Paradox, but when acting for clients in this regard, I always put everything in writing.
    a. You avoid call-centres
    b. Generally someone who is in a position to agree repayment proposals replies
    c. Once you get one creditor to agree in writing, this can be used as leverage against the others
    d. (to me the most important) you only tell the story once not 20 times.
    I find that rather than just asking them to freeze interest penalties etc. it is more effective to offer something at the same time. Show on the schedule the total of your indebtedness and the percentage that you are offering to each to avoid allegations of favouritism.

  5. Reply
    Sensible Citizen
    July 17, 2011 at 9:05 pm

    You’ve proven you can’t handle your debt or used credit wisely. So they’re not going to trust anything you say.

    A reputable DMP company has relationships with these companies and they can be comfortable with dealing with them as they are reputable and have shown in the past to do the job they say they will.

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