How to renegotiate a Debt Management Plan you can't afford?

April 11, 2008 7:24 PM

If you're enrolled in a debt management plan through Consumer Credit Services but can no longer make your agreed upon payment, how can you get it lowered?

My parents enrolled in such a program a year and a half ago because they were deeply in debt and have managed to make their very high monthly payments until now in order to be out of debt in five years. The problem is they agreed to the plan when my mother was unemployed under the assumption that she would soon get a job but she has not been able to find one despite repeated efforts. They have now run through all their savings and retirement money trying to keep up with this overambitious payment plan they made and are within a month or two of defaulting which would wipe away all the hard work they have done. They are in their sixties and in quite desperate straits. Apparently, they have gotten nowhere trying to plead their case to the people at CCS. They are paying at least $1000 more than they can afford a month and have already cut their budget to the bone so there's no hidden money there.

Any ideas on how to renegotiate such an agreement/cut through the red tape at such an organization? They need to find a way to get through to someone who actually has the power to change their monthly payments, but so far are having no luck despite calling the headquarters.

posted by coffee and minarets to work & money (4 comments total)

Honestly, they should probably ditch the CCS and work with the lenders directly. I doubt those guys were really on their side. Instead of doing some crazy one payment scenario, they could have been snowballing and probably made a significant dent in the debt, rather than paying the interest. Also, point them to Dave Ramsey's radio show or book.
posted by cdmwebs at 8:25 PM on April 11, 2008

Is bankruptcy out of the question?
posted by netbros at 8:44 PM on April 11, 2008

Good credit counseling services are few and far between. It's likely that any creditor that will work with a CCS will also have its own in-house forbearance or hardship payment plans. Your parents should look into that; they may find that such plans actually offer lower APRs than a CCS can negotiate with a comparable payoff time. (And no middleman taking a slice off the top!)
posted by ruddhist at 8:47 AM on April 12, 2008

This is what bankruptcy is for. Truly. They've exhausted the non-bankruptcy options, and bless them for the sacrifices they've obviously made to do that. But time to call a bankruptcy attorney. Depending on the state's rules, their home and (remaining) retirement assets are very likely protectable. And the credit score bounces back much faster than one would think. They're going to get through this.
posted by nakedcodemonkey at 11:31 AM on April 12, 2008