Consumers rein in credit

Credit Counseling Centers help people manage debt

People have gone from the phase of being comfortable carrying high debt to the phase of working to pay down the debt and not take on any additional debt.” She provided four examples — and one non-success story.

Accountant: He and his wife amassed $80,000 in credit card debt after adopting two children and adding on to their home. He lost his job, and they signed up for an agency “debt management plan” (DMP) that allowed them to meet basic living expenses while paying their debt in five years.

They avoided bankruptcy and kept a high credit score.

Registered nurse: She is a divorced single mother who contracted a communicable disease working at a local hospital. This generated huge medical bills and loss of income.

Her employer was slow in paying these debts. This happened after a drastic cutback in hours due to state budget cuts. She signed up for a DMP designed to pay down credit card debt and has since changed jobs, was paid her work-related medical bills and is looking forward to being debt free in four years.

Social worker: Circumstances and poor credit led to his using small loan companies that charge extremely high interest rates. Since entering a DMP, he has made steady progress in getting out of debt. The agency is working to improve his credit rating so he can qualify for real credit, once his bills are paid, and not have to resort to high-rate loans that people with poor credit have to rely on.

Attorney: His debt was due to credit card overspending, poor money management and income reduction. He was worried about his credit score before going on a DMP.

After 14 months he found his score had improved to the point he could refinance his home to pay off his balance, make home repairs and install a new heating and cooling system.

Unsuccessful: An accountant recently created high credit card debt supplementing his business losses.

He needed to make significant spending habit changes to ensure DMP success but was unwilling to do so. He either didn’t make scheduled deposits or made them so late the plan failed and he ultimately had to be dropped from the plan.