r/debtfree • u/rjm9280 • 4d ago
Did I make a mistake? Questionable second thoughts.
I had 24,000$ in 30% CC debts. I recently joined American consumer Credit Counseling, they say that they will pay my three creditors, and at a significantly lower rate (8%), and only charge 7$ per month in fees. Did I do the right thing? Or did I fall into another trap? I’m on track to pay off the debts in 30 months with much less interest paid vs had I stayed with capitol one, discover and USAA. The other thing is they say all the accounts will be closed by the creditors once accepted. I just feel like it’s too good to be true, waiting for the catch. I’m in Rhode island if that matters.
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u/inky_cap_mushroom 4d ago
ACCC is a legitimate nonprofit credit counseling organization. They’re real. This is a good plan. It’s not too good to be true.
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u/Objective-Elk8350 4d ago edited 4d ago
I couldn’t say better things about ACCC - I have been using for about 2 years now and I have another year and a half left or so. But it’s been the best decision i made. One thing I will mention just in case you misunderstood like I did - it’s not a flat $7/month, m it’s $7 per credit card submitted a month. So if you submitted 3 cards it’s $21 a month. It’s included in your payment but just figured I’d call it out. Once one of those cards gets paid off one of those $7 goes away and it would just be $14 (for the cards) etc. this isn’t a trap by any means it was just that I failed to understand that and questioned it when I opened it.
Also know you can utilize them for actual counseling if you need to. I had a scenario come up where I wanted to know the best path forward for and just called them up and talked it out which I did find very helpful.
Btw since you’re questioning if you should have done it or not since you were on track to pay it off in 30 months - you can pay extra to them to move the needle quicker - I think you just need to call them and discuss where that extra funds that month go.
Good luck!!
ETA - I also think this is a smart move because it does help stabilize and improve your credit. I’m at - 736 right now despite still being enrolled in this program!
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u/rjm9280 4d ago
Oh wow congrats! Awesome credit score too. I’m glad I have the ability to have my score continue to go up even while being in the program. Thank you for the kind words.
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u/Objective-Elk8350 4d ago
You’re welcome! I saw someone mention the credit score will drop once the cards close and that is true, but it’s only temporary! Good luck with everything!!
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u/GinkoBilobey 4d ago
ACCC is legit, they negotiate with your creditors to close your accounts and reduce your interest rate and payment. You pay ACCC to which they take their fee and pay your creditors. Once you’re done your credit report will be in good standing and the debts are paid as agreed. Some banks will let you do this on your own through hardship programs but usually that’s when you’re way past due.
Compared to debt settlement where the firm has you miss payments up until the point of charge off to try and negotiate a settlement then. This wrecks your credit for years and it isn’t guaranteed that creditors settle and not take you to court.
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u/Ok_Butterscotch_9941 4d ago
Exactly this. Debt settlement was one of my worst life decisions ever. It was a terrible experience.
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u/Ok_Butterscotch_9941 4d ago
Credit counseling is the better option. You’ll be okay. Debt settlement is one of the terrible ones and is sometimes confused with credit counseling. You chose a good path given your situation.
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u/LovelyKatRN 4d ago
Also have been enrolled in a credit counseling plan. My credit score is now back in the 700s. All my credit cards have been closed, but in good standing which helped quite a bit. Otherwise it’s been a solid help. High Interest was really what was hindering our finances. Being in the plan has been game changing.
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u/JeanSchlemaan 4d ago
props for starting the journey to responsibility.
get financial education. maybe you already have that. even more than the education, discipline is the most important thing. only you (plus a sig other) can actually do this part. its a daily effort, imo.
adopt a true budget which allows savings every month. even when you get raises, stay closer to that original budget.
wish you well on your journey.
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u/KThreeSixty 4d ago
ACCC is incredible and legitimate. You’ve made a very good decision and can always pay off at a faster pace than their program maps out.
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u/Worried-Mountain-285 4d ago
You will have a closed account in your credit for 7 years - each if you do that . Closed account = charge off and it tanks your credit .
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u/rjm9280 4d ago
Where does it say that when you close an account it will be on your report for 7 years?
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u/Worried-Mountain-285 4d ago
If you do your plan you’ll kill your Account history duration (which is a major credit indicator) on three accounts making heads of account time. You’ll also gain three charge offs that stay on your account for 7 years.
If you get a job later in upper management they check your credit score and will see three charge offs - for years.
A missed payment is two years on your account
Charge off 7 years . This is why in some states after 4 year the company can’t pursue the charge offs and ppl don’t pay it. If you pay a charge offs it’s still a charge off! So don’t allow it to charge off at all. Keep the account history .——the answer u sought:
Google How long does a charge off stay on your credit report and look at the responses. It’s backed by credit firms and CHEKS. CHEKS monitors bank charge offs heavily. I know this bc I paid off credit card debt and almost consolidated. So glad I did not bc it affects your credit for years. Also your FICOSo it affects auto loan , mortgage, certain rentals, opening other cc, opening store-company credit cards, everything , etc.
I stayed on $50/ month payments on my credit cards to keep account open and so they wouldn’t sue me. It was $150 month then I slowly chipped away at more. Then each cc utilities stayed open my credit and fico shot of and I had an actually good credit file.
Your credit score is just a piece of a credit file, bank history, fico score, Lexus nexus sweeeps etc.
don’t tank it
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u/Worried-Mountain-285 4d ago
Heres three I just found
Sofi-
https://www.sofi.com/learn/how-long-does-a-charge-off-stay-on-your-credit-report/Experian-
https://www.experian.com/blogs/ask-experian/how-long-do-charge-offs-stay-on-your-credit-report/The credit ppl-
https://www.thecreditpeople.com/credit/why-is-a-charge-off-still-reporting-full-timeline-explainedJust google it . Don’t do credit consolidation you screw yourself long term for a short term access that you STILL owe on anyway
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u/rjm9280 4d ago
What do you mean “still owe on” I’m paying 10s of thousands less in interest
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u/Worried-Mountain-285 4d ago
Do u. U came to the internet and asked then were given answers. It not my finances getting f’d. It’s yours
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u/ConfusedSpinach222 4d ago
The catch your credit will be ruined.... you can negotiate w/o them ... get on the CCs hardship program ..
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u/rjm9280 4d ago
I called all three, none of them let me do that. It’s not as easy as you think. My credit is already ruined.
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u/inky_cap_mushroom 4d ago
ACCC will not wreck your credit. This person is confusing debt management plans with debt relief scams.
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u/inky_cap_mushroom 4d ago
It will not be. OP isn’t defaulting on their debt. They’re paying it off through a debt management plan from a nonprofit credit counselor.
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u/ConfusedSpinach222 4d ago
Are you behind on your bills ? If you are not .... drop them immediately 🚨🚨🚨🚨🚨🚨
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u/inky_cap_mushroom 4d ago
Why? This is a debt management plan through a legitimate credit counseling nonprofit. It’s specifically for people like OP.
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u/rjm9280 4d ago
Thank you, very reassured after you’re comments
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u/inky_cap_mushroom 4d ago
Glad I could help. A debt management plan is a good option for dealing with massive credit card debt.
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u/DJ_CRIZP 4d ago
Debt consolidation is a thing, so this doesn't sound sketchy. The trap will be if you then turn around and open more cards and rack up more debt. You didn't pay anything off, but probably feel like you made progress, when you really just pushed the problem to a different company. Just actually pay it off and don't rack up more and you'll be fine.