For many people, personal debt, especially when they get in over their heads is overwhelming and often times suffer in silence. Lynn, one of our clients, was gracious enough to participate in an interview to give some insight into her journey. Hopefully, from Lynn’s story, you can find some tips to help you get your debt under control.
Q: What triggered you to address your unpaid debt and credit status?
A: I started to receive letters in the mail from Collection Agencies and credit card companies like Capital One stating that I owed money and I would be sued and garnished if I did not make efforts to pay the debt
Q: What kind of debt did you have? What was your credit score?
A: When I first started, my Credit Score was a 540. I was piling on credit card debt, medical bills and old collection accounts I had been ignoring.
Q: What made you seek help from a credit counseling service?
A: The fear of being garnished. I already did not think it was in my budget for me to pay back any of my debts and the thought of losing more money was enough.
Q: What Actions did you take personally to prepare you for entering into a Consolidation with your debts? How did you find an agency to help you, and why did you feel that was a safer route?
A: A few friends of mine who were already enrolled in Debt Management Programs referred me to a Credit Counseling agency. After doing my own research online I was able to talk to an agent. We did a thorough budget analysis that showed me how I could afford to enroll in the program and pay back my debts. I looked through my credit report to find all of the debts I had. Once it was clear that I could afford to fit this into my budget I felt this was a safe route.
Q: Explain your experience in the Debt Management Plan. What did you learn while you were going through the program? How did your behavior change financially while you were enrolled in the Debt Management Plan? Were there any extra habits you broke to help build your credit while you were paying off your older Debts?
A: The budget analysis was very important in the beginning because it showed me where I was spending extra money when I did not need to. When I started out, money was always tight. The time I spent in the Debt Management Plan was the first time I ever had to stick to a budget. In order to save a lot more, going out to eat was immediately cut out. Initially, only the creditors who were threatening to come after me were added to debt consolidation. I got a secured credit card with a $500 savings deposit. This would help me build new credit while I paid off my old debts. After time had passed and the balances became lower, my other accounts were added in until I had everything completely paid off.
Q: Now that you have gone through with a Debt Management Plan and successfully completed the program, what type of changes to your financial life do you see? What is your Credit Score like now and what actions are you currently taking to be able to maintain your positive score increase?
A: When I began working on my credit score it was a 540. Today, I am looking at a score of 730! By sticking to on-time payments and a budget, I was able to keep my $500 Secured Card at a low balance and after a year or so I received a pre-approved offer for a Discover Card at 18%.
Q: Would you recommend a Debt Management Plan to your friends and colleagues? What did you take away from the program that you did not expect initially when you enrolled in the program?
A: I currently do have friends who are enrolled in a Debt Management Plan. My advice to them was to first make your budget so that you can see where your money goes. When I began Debt management I did not expect the impact on budgeting nor did I understand how your credit actually works. Now that my score has increased to a 730 I’m planning on buying myself a new car!