Share post
Debt Consolidation Forums Debt Problems forums

Should I cancel credit cards when in a debt management program?

member profile picture

If i agree to a debt management program does this mean I have to cancel my credit cards?




Generally, you agree to cancel your cards when you enter a DMP. This is common practice and common sense. You can't pay off the debt if you continue to charge.

Sub: #1 posted on Wed, 05/02/2012 - 05:23

OhioGal1 OhioGal1
Moderators Cum Industry Expert
(Posts: 5253 | Credits: )

But I have heard that my credit score will drop if I cancel my credit cards.

Sub: #2 posted on Thu, 05/31/2012 - 03:36

Unregistered


Your score is going to tank just being in the debt management program.

When you enter the program , a proposal of monthly payments is sent to your creditor. Usually this letter prompts the creditor to shut down your account.

Sub: #3 posted on Thu, 05/31/2012 - 03:41

SOAPLADY SOAPLADY
Moderators Cum Industry Expert
(Posts: 17271 | Credits: )

Debt Management plans available through credit counseling agencies are typically used by someone who can no longer afford their monthly payments on unsecured debts like credit cards. If you are worried about your credit score more than getting out of debt, you may not be in a position to need any debt intervention.

Enrolling in a debt management plan does not in and of itself impact your credit score. The accounts being closed when you enroll does (only marginally - couple points each account).

If your accounts already fell behind, but are not yet charged off, enrolling in a DMP can help overall, when some of your creditors agree to re-age accounts and bring them current.

Working with a credit counseling agency to repay debts will take 4 to 5 years. It is unlikely you would be opening new accounts during this time frame, so length of credit accounts open will get hit. This can be rebuilt.

If you can qualify for and complete a debt management plan it will prove to be the least confrontational and lowest impact to your credit out of the few debt intervention options available.

Don't start working with a credit counseling company if you have any reason to doubt you can make the monthly payment on time all the time. A DMP is best for someone with a dependable and steady income.

Sub: #4 posted on Fri, 06/01/2012 - 15:56

MichaelBovee MichaelBovee
Moderators Cum Industry Expert
(Posts: 125 | Credits: )

This doesn't sound quite right. Why would you have to cancel your credit cards because your in a debt management program. I thought it was better to keep the accounts open and have the accountability to pay them off? If necessary have someone else hold the cars for you, but don't close them. As far as I know, closed accounts hurt your credit more than open ones do.

Sub: #5 posted on Mon, 08/06/2012 - 10:08

mydebtrelease mydebtrelease

(Posts: 24 | Credits: )

In most cases, you're required to close the accounts when in a debt management program.

Sub: #6 posted on Mon, 08/06/2012 - 10:28

OhioGal1 OhioGal1
Moderators Cum Industry Expert
(Posts: 5253 | Credits: )

By entering a debt management program, you are not paying as agreed. The creditor may agree to lower your interest and drop fees. They do this as an alternative to bankrutpcy. Part of the agreement when you enter debt management is that you CLOSE your credit lines.

Sub: #7 posted on Mon, 08/06/2012 - 10:30

SOAPLADY SOAPLADY
Moderators Cum Industry Expert
(Posts: 17271 | Credits: )

The closure of the accounts is to ensure you don't continue with rampant spending that put you under debt in the first place. There are people who continue spending irresponsibly despite being under a debt management program. This slows down the pace of the program and they find themselves under debt for a longer period of time than expected.

Sub: #8 posted on Mon, 10/29/2012 - 22:54

daniel.radcliffe0110 daniel.radcliffe0110

(Posts: 46 | Credits: )

Attachment
More information
  • Files must be less than 500 MB.
  • Allowed file types: txt pdf jpg jpeg png.


Page loaded in 0.774 seconds.